Loop Industries remains undervalued, Paradigm Capital says

Loop Industries (Loop Industries Stock Quote, Chart, News, Analysts, Financials NASDAQ:LOOP) remains well-positioned and fundable with strong backing from Reed, Société Générale, and Ester, according to Paradigm Capital analyst Marvin Wolff, who kept his “Buy” rating and $5.80 target price unchanged in a July 16 note. His forecast assumes two Loop-Ester JV plants operating by fiscal 2029, generating $77.7-million in EBITDA.

“Earnings came in at a loss of $3.4M or ($0.07/sh); we were expecting a loss of $3.2M or ($0.07/sh),” Wolff said. “During the quarter, LOOP made progress on several fronts as it moves toward building India Plant #1, via ELITe which is the Loop joint venture (JV) with Ester International.”

Loop Industries is a Canadian technology company that uses patented methods to break down low-value PET plastic waste into basic materials, which it then turns into high-quality, food-grade plastic and polyester.

Wolff said Loop is a strong investment opportunity due to its focus on recycling technology that meets growing global demand for sustainable solutions. He highlighted Loop’s ESG appeal, global partnerships, and expansion plans, including JVs in Europe and India. The company’s technology is protected by patents and has backing from SK Geo Centric. Loop’s business model includes licensing fees, strong margins, and long-term EBITDA growth, all supporting what Wolff sees as an undervalued stock with significant upside.

“Loop Industries has developed disruptive technology that addresses recycling of single-use plastics,” he said. “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.”

Wolff said Loop has narrowed its Indian plant site options to two locations in Gujarat, with a final decision expected by August 30. The goal is to have two plants completed by October 2028, with the first beginning commercial production in the second half of fiscal 2027 and reaching full capacity in 2028. Site selection is also underway for a European Infinite Loop facility, where Loop will provide engineering and modular construction. The company may choose not to take an ownership stake in the European plants but instead earn royalties, with the option to buy in later.

“Loop has $9.7M in cash and available cash and total liquidity of $12.3M. The company believes it has sufficient cash to see it through the startup of the India #1 plant, as the funding package with Société générale will be triggered for that event.”

He said evian, ON Ag, L’Occitane, and Garnier (L’Oréal) are the first brands using Loop’s technology. Evian began its rollout in South Korea in 2023, with gradual expansion to other countries through 2025.

“Evian plans to use recycled bottles for 100% of its product by 2025, which would require between 35,000 tpa and 50,000 tpa of Loop resin, to be supplied from the Ulsan plant,” Wolff said. “Loop has also started to supply ON Ag, a Swiss-based performance sports shoe and outfit company, with polyester fibre to be used for the upper portions of running shoes. Loop has partnered with L’Occitane to produce a new shower oil bottle, and most recently Garnier has launched with Loop a micellar cleansing water bottle. These high-valued brands clearly see the value of Loop’s virgin equivalent PET resin.”

Wolff estimates that Loop will report an Adjusted EBITDA loss of $11.3-million on $4.0-million in revenue for fiscal 2026, slightly improved from his previous forecast of a $11.7-million loss on $4.9-million in revenue. He expects the company to turn profitable in fiscal 2027, with Adjusted EBITDA of $0.8-million on $42.8-million in revenue.

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