Loop Industries keeps “Buy” rating at Paradigm Capital

Paradigm Capital analyst Marvin Wolff reiterated a “Buy” rating and $5.80 target price on Loop Industries (Loop Industries Stock Quote, Chart, News, Analysts, Financials NASDAQ:LOOP) in a June 2 research brief, citing the company’s patented recycling technology as a potential global standard for PET plastic reuse.

Wolff said Loop’s process can recycle any PET-based plastic waste into food-grade PET made entirely from recycled content. With regulatory pressure, corporate sustainability goals, and ESG-driven investment trends supporting the shift, he believes Loop is well-positioned to capitalize on the growing global demand for circular plastic solutions.

His valuation assumes that two Loop-Ester joint venture plants will be operational by fiscal 2029, generating $77.7-million in EBITDA with $135-million in debt. He said Loop remains well-funded with backing from Reed, Société Générale, and Ester Industries and that land acquisition for the two planned facilities in India is underway.

“Shares outstanding remain at 66.5M,” Wolff said. “Using an 8x EV/EBITDA multiple and a 10% discount rate, we arrive at our target price of $5.80 (unchanged). With the strong support of Reed, Société Générale and Ester, Loop has demonstrated that it is very fundable; thus, we maintain our ‘Buy’ rating.”

Loop is shifting its strategy toward joint ventures that produce recycled monomers and licensing agreements that include engineering support, allowing for faster and more cost-effective global expansion of its technology.

“JVs where the plant produces rDMT and rMEG,” Wolff said. “These two monomers can then be sold directly into the specialty chemical feedstock market or further advanced into specialty plastics, including PET for high-quality clear plastic containers, or spun into polyester yarn for the textile industry (incl. sport shoe uppers). Loop would receive royalties above its share of JV economics.

“The second arrangement is where Loop sells a license to use its technology and receives an upfront fee and milestone payments plus a royalty. This is being used in the Reed European project. Loop can form a JV in such projects but have a small ownership position like the 10% it owns in the Reed JV.

In both cases, Loop would also provide engineering services for the project, generating additional revenue. Its “design one, build many” strategy means Loop can easily adapt plant layouts and process designs to different sites.

“We estimate for a facility like the India plant under development, this could amount to $10M per plant,” Wolff said. “We believe this focused strategy will allow Loop to propagate its unique recycled PET strategy quickly on a global basis.”

Wolff expects Loop to generate a ($11.7)-million Adjusted EBITDA loss on $4.9-million in revenue for fiscal 2026, an improvement from his previous estimate of a ($12.6)-million loss. He forecasts those figures will improve to $0.8-million in Adjusted EBITDA on $42.8-million in revenue in fiscal 2027, though both are down considerably from prior estimates of $28.2-million in EBITDA and $85.7-million in revenue.

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