Heritage Distilling is a buy, this analyst says

Roth Capital Markets initiated coverage of Heritage Distilling Holding Company (Heritage Distilling Holding Company Stock Quote, Chart, News, Analysts, Financials NASDAQ:IPST) on Jan. 23 with a “Buy” rating and a 12-month price target of US$8.20, framing the stock as a high-risk, high-reward public-equity proxy for exposure to AI-driven intellectual property infrastructure.

In his initiation note, analyst Darren Aftahi said Heritage’s strategy around Story Protocol ($IP) positions the company as an active participant in what he described as the emerging “AI defensibility” trade. Story Protocol is a purpose-built Layer-1 blockchain designed to make intellectual property — ranging from content and datasets to AI models, code and brands — programmable, enforceable and licensable on-chain.

Essentially, Story Protocol is a special kind of blockchain that lets people safely own, share, and get paid for things they create, like stories, data, or computer programs, even when those things are used by AI.

Aftahi said Story’s long-term value hinges on adoption by large IP owners, data providers and media companies, which would drive transaction activity and token usage. Against the backdrop of an intensifying AI arms race, he views Heritage, now operating as IPST, as a way for public-market investors to gain indirect exposure to IP protection and monetization tied to AI training data.

Unlike passive digital-asset treasury vehicles, Aftahi noted that IPST actively operates validator nodes on the Story network. This allows the company to generate recurring yield while also benefiting from potential token price appreciation. Validator operations earn fees tied to network activity, while staking its own tokens can produce yields of more than 11%, creating what Aftahi described as a software-like revenue stream with roughly 95% gross margins and minimal incremental cost.

He said Story Protocol’s utility-driven tokenomics include a fixed maximum supply of about one billion $IP tokens, with roughly 34% currently circulating and scheduled unlocks extending through 2029. Every on-chain action, such as IP registration or licensing, consumes $IP tokens, with fees partially burned and partially paid to validators, creating a direct link between protocol usage and token economics.

Aftahi said anchor-tenant adoption by large AI model developers or media conglomerates would be critical to validating Story’s enterprise readiness and accelerating growth. While current activity is running at roughly 300,000 daily transactions, he pointed to an estimated global IP asset market exceeding US$60-trillion as the long-term opportunity, contingent on broader protocol adoption.

From a valuation standpoint, Aftahi said IPST trades at a material discount to the net asset value of its underlying token holdings, with an implied multiple of roughly 0.15x mNAV, compared with a median of about 0.80x for comparable digital-asset treasury peers. He said a full re-rating to 1.0x mNAV would imply a share value of about US$7.00, before assigning incremental value to the validator business. His US$8.20 target reflects a blended approach, weighting validator economics more heavily than peer mNAV comparisons.

Heritage was listed on NASDAQ in 2023 and was originally a craft distiller of consumer alcoholic beverages, offering whiskeys, vodkas, gins, rums and ready-to-drink canned cocktails through wholesale distribution, company-owned distilleries and tasting rooms, and online channels. Founded in 2011 and based in Gig Harbor, Washington, the company later expanded into crypto-themed initiatives, including Bitcoin-branded products and the adoption of a digital-asset treasury strategy, appointing Matt Swann to lead its crypto efforts.

Aftahi said Heritage is expected to generate an Adjusted EBITDA loss of about US$10.1-million on revenue of US$7.4-million in fiscal 2025, improving to Adjusted EBITDA of roughly US$7.9-million on revenue of US$16.5-million in fiscal 2026.

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