Today, according to a report on PlantX which was made public, the price target some analysts assigned for PlantX jumped substantially.
- A report obtained from a closed group email newsletter shows that analysts consider the PlantX stock (VEGA.CN), (PLTXF:OTC US) and (WNT:Frankfurt) to be substantially undervalued.
- The new price target of CA$0.89 is set for 7/30/2023 which represents an eightfold increase from the current share price of CA$0.08
Download it here: PlantX Analyst Report
The report which was produced by a flagship fund, sent via email to numerous insiders, may shed light on what VC’s and hedge fund investors think about PlantX Life as it gathers pace and gears up for major consolidation in it’s industry. Reasons cited for the increased valuation and price target are provided in the report and below. This comes notwithstanding the fact that there was an isolated case where a plant based food stock, “Beyond Meat” (NASDAQ: BYND) suffered a downturn.
Clearly, the plant based food industry represents the early phase of a major supportive trend as discussed here. A Banker, Luigi Wewege pointed out that there are some important players like the WEF and major hedge funds, wielding the power to drive plant based food adoption to the next level.
Why analysts called PlantX a “buy”:
- Reduced marketing expenses from 49% to 35% as a percentage of revenue: Ecommerce platforms that rely on SEO and digital marketing, face their biggest expense during the startup phase. The majority of SEO work has now been completed and 5000+ products were onboarded.
- Unjustifiably cheap valuation versus peers: The report states that currently, the company trades at half their estimated 2022 revenue run rate, representing a low multiple of 0.89 P/S. This contrasts starkly with other players in the same industry which trades between a 4-7.5 P/S multiple, notwithstanding market conditions. The report states a bear-bull range where the price target is CA$0.89-CA$4.82.
- Amazon and Walmart engagements: Merely by also listing products on Amazon and Walmart, the analysts believe that revenue for 2023 can grow a further 12%. This does not include other sources of revenue, for example the fact that corporate workplaces like Apple and Tesla buy PlantX owned brands for their staff meals. Yet given this statistic, the report did not mention the obvious, which is that PlantX is safely diversified in terms of marketing channels. The anticipated revenue of Amazon and Walmart combined still represents a minority of its revenue share.
The most insightful statement we gleaned from the report was the following:
“…Our valuation and comparative analysis has established a base-case present value of CA $0.89 to CA$2.02 per share while increasing the discount rate to 20% to reflect current market conditions. This analysis reflects the 1:20 share consolidation executed by management, dramatically reducing the float, and in our opinion, positioning the company to benefit for the eventual return of investor interest to a space plagued by the challenges of the overall equity markets over the last 18 months. We believe that increasingly efficient capital allocation as well as increasing the total revenue of highest margin segments of the business will pull forward management’s goal of profitability in calendar 2023. Specifically, we are impressed by the substantial reduction in marketing and promotion expenses meanwhile revenue remains strong. We also foresee similar reductions (relative to revenue) in general and administrative operating costs and stock-based compensation line items…”