Is LNZA stock a buy?

Following a major development, Roth MKM analyst Leo Marinari has maintained his “Buy” rating on LanzaTech Global (Lanzatech Global Stock Quote, Chart, News, Analysts, Financials NASDAQ:LNZA).

On September 3, LNZA announced it had signed a master license agreement with SEKISUI to develop waste-to ethanol plants across Japan.

““With this Agreement, we are progressing our vision for a circular carbon economy. Our continued collaboration with SEKISUI is setting the groundwork for providing municipalities with a platform that reduces waste, captures carbon, generates valuable sustainable feedstocks, and importantly, creates local jobs,” said LanzaTech CEO Dr. Jennifer Holmgren. “We are grateful to SEKISUI for their commitment to scaling carbon recycling across Japan and for being at the forefront of developing a global blueprint for other countries and businesses to follow on how to access and utilize the carbon locked in local garbage.””

In a research update to clients September 3, Mariani maintained his “Buy” rating and price target of $5.00 on LNZA.

The analyst thinks the company will post an EBITDA loss of $82.4-million on revenue of$80.0-million in fiscal 2024. He expects those numbers will improve to an EBITDA loss of $52.4-million on a topline of $145.0-million in fiscal 2025.

“LNZA currently trades at around 2.4x our 2024 revenue estimate and around 1.8x our 2025 revenue estimate,” he wrote. “Our $5 price target is based on a 5.5x multiple of our 2025 revenue estimate which yields around $4 plus $1 in value for LNZA’s ~50% interest in LanzaJet. Impediments to our price target include slower-than-expected revenue growth, lower-than-expected gross margins and industry competition hurting long-term growth.”