LOOP stock is a buy, Paradigm says

Following the company’s second quarter results, Paradigm Capital analyst J, Marvin Wolff, has maintained his “Buy” rating on Montreal-based Loop Industries (Loop Industries Stock Quote, Chart, News, Analysts, Financials Nasdaq:LOOP)

On October 16, LOOP reported its Q2, 2024 results. The company posted a loss of $4750 on revenue of $54.00.

“The groundbreaking ceremony of the Ulsan ARC paves the way for the planned construction of the Infinite Loop™ Ulsan facility and the commercialization of Loop’s technology,” said CEO Daniel Solomita. “We are currently engaged in advanced discussions to secure the required funding for the Infinite Loop™ Ulsan facility and we are excited to continue to collaborate with our valued strategic partners as we now transition to the next stage of Loop’s strategic development.”

Wolff says his investment thesis remains intact and predicts LOOP will begin to book meaningful revenue in fiscal 2025.

“Loop Industries has developed disruptive technology that addresses recycling of single-use plastics,” the analyst argued.  “Loop’s patent-protected technology and unique process allow any kind of PET-based plastic waste to be recycled into a branded, food-safe grade of PET from 100% recycled content. In the next decade with regulatory, corporate sustainability and investor ESG targets acting as tailwinds, Loop’s technology has the potential to be a global standard for PET recycling.”

In a research update to clients October 16, Wolff maintained his “Buy” rating and one-year price target of $6.30 on LOOP, implying a return of 80 per cent at the time of publication.

The analyst thinks LOOP will generate EBITDA of negative $27.8-million on revenue of $200,000 in fiscal 2024. He expects those numbers will improve to EBITDA of zero on a topline of $24.5-million the following year.

“We are modelling three JV plants rolling out for FY26, FY27 and FY28. The Ulsan plant will be a 49/51 JV, the French plant 33% and Japan 49%. We assume a debt/equity structure of 70%/30%. Using our 2028 forecast EBITDA of $112M, debt of $366M, 87M shares outstanding (97M prior, 47M currently), a 10x EV/EBITDA multiple and a 10% discount rate, we arrive at our $6.30 target price. With the strong support of SKGC we believe Loop will be fundable, thus we maintain our Buy recommendation,” the analyst added.