Is LOOP stock still a buy? (June, 2024)

Its fourth quarter results are in the books and Paradigm Capital analyst J. Marvin Wolff still thinks there is money to be made on Loop Industries (LOOP Industries Stock Quote, Chart, News, Analysts, Financials NASDAQ).

On May 29, LOOP reported its Q4 and fiscal 2024 results. In the fourth quarter, the company posted a loss of $5.09-million on marginal revenue.

“Our partnership with Ester reflects our emphasis on allocating capital in low-cost countries. By establishing the Infinite Loop™ India joint venture, we expect to leverage India’s favorable economic conditions to produce virgin quality, recycled monomers and specialty polymers with significant cost efficiencies, which we believe will enable Loop to achieve attractive economic returns while serving a broader range of customers,” CEO Daniel Solomita said. “Simultaneously, our planned partnership with Reed is expected to provide for attractive financing to meet our deployment. We believe this project will provide significant returns on capital and value creation for our shareholders. Also, we are excited for the potential to be undertaking this project with a strategic partner with which we share a common vision for the future and are fully aligned.”

In a research update to clients June 4, Wolff said these results were in-line with his expectations. The analyst maintained his “Buy” rating and price target of $8.50 on the stock, implying a return of 224% at the time of publication.

Wolff thinks the company will post EBITDA of negative $21.2-million on revenue of $200,000 in fiscal 2024. He expects those numbers will improve to and EBITDA loss of $17.1-million on a topline of $400,000 in fiscal 2025.

“We are modelling four JV plants rolling out for FY27 and FY28. The Ulsan plant will be a 49/51 JV, the French plant 16.5%, the Indian plant 50% and Japan 49%. We assume a debt/equity structure of 60/40 and 70/30 for India. Using our FY28 forecast EBITDA of $147M (unchanged), debt of $433M (unchanged), 57.5M shares outstanding (unchanged, ~47M currently), an 8x EV/EBITDA multiple and a 10% discount rate, we arrive at a target of $8.47 (rounded to $8.50). With the strong support of SKGC, Reed and Ester, we believe Loop is very fundable, thus we maintain our Buy rating,” the analyst concluded.