Paragon Advanced Labs is undervalued, this analyst says

Clarus Securities analyst Stephen Kammermayer initiated coverage of Paragon Advanced Labs with a “Buy” rating and a $7.00 target price in a Dec.12 report, arguing the company is positioned to disrupt the global mining assay market as it scales what is expected to be the world’s largest commercial fleet of PhotonAssay machines.

Paragon Advanced Labs provides technology-enabled mineral testing services to the mining industry and is based in Canada. The company is rolling out PhotonAssay, a proven, non-destructive gold analysis technology that materially reduces turnaround times and operational bottlenecks compared with traditional fire assay methods.

Kammermayer said the global mining testing market is estimated at roughly US$5.3-billion annually, with exploration assays representing the largest segment. While PhotonAssay has the potential to replace the majority of conventional fire assay work over time, manufacturing constraints are expected to limit global capacity.

With only about 60 PhotonAssay machines projected to be in operation worldwide over the next 12 to 14 months, and a maximum of roughly 150 units by 2030, the analyst believes scarcity should support sustained demand and utilization for early operators such as Paragon.

A key pillar of the investment case is Paragon’s strategic agreement with PhotonAssay manufacturer Chrysos Corp. Under the arrangement, Chrysos will supply Paragon with an additional nine machines, bringing its fleet to 12 units, and grant limited geographic exclusivity at new locations. Kammermayer said this creates a meaningful competitive moat, allowing Paragon to scale without near-term direct competition as the technology gains adoption.

Clarus expects Paragon’s growth to accelerate sharply as new machines come online and utilization ramps. Kammermayer forecasts revenue increasing from $6.3-million in fiscal 2025 to $31.4-million in fiscal 2026, and further to $54.2-million in fiscal 2027, driven by fleet expansion and rising customer acceptance. Adjusted EBITDA is projected to improve from negative $3.5-million in 2025 to $9.0-million in 2026, reaching $19.0-million in 2027 as operating leverage materializes.

“PhotonAssay represents a step-change in mineral testing, and Paragon is positioned to be a first-mover beneficiary in a capacity-constrained market,” Kammermayer said, adding that the company’s fleet build-out over the next 12 to 18 months will be the primary driver of earnings visibility.

-30-