Scotia puts street-high target on 5N Plus

Scotia Capital analyst Jonathan Goldman says 5N Plus (5N Plus Stock Quote, Chart, News, Analysts, Financials TSX:VNP) offers significant upside to Street expectations in 2026 and 2027, driven by underappreciated operating leverage and potential optionality from M&A and defence.

As reported by the Globe and Mail, in a report released June 22, Goldman initiated coverage of 5N Plus with a “Sector Outperform” rating and a Street-high $48.00 target. The average target is $38.00

5N is a global producer of ultra-pure specialty materials used in mission-critical applications across solar, space, defence, medical imaging and pharmaceuticals.

“With shares up almost four times over the last 12 months, investors may wonder whether they’ve missed the run,” he said. “While the market has come to recognize the business transformation to higher-margin, downstream operation and the extensive growth runway underpinned by durable secular trends, we believe there is still money left on the table.”

Goldman said about two-thirds of 5N’s revenue has at least two years of visibility, with Renewable Energy volumes contracted to 2028 through First Solar and Space Solar Cells bookings at AZUR extending beyond 2028.

The analyst said the company is now less exposed to metal price volatility because of its shift toward higher-margin downstream operations. He sees room for a guidance increase this year, noting 5N has exceeded Street expectations by an average of 22% over the last 13 quarters.

The company reported first-quarter 2026 Adjusted EBITDA of $29-million but left full-year guidance unchanged at $100-million to $105-million.

“We see good reason for Performance Materials margins to remain elevated as customers are willing to pay a premium for security of supply amid geopolitical uncertainty,” Goldman said.

Goldman said his base valuation supports a target of about $40 to $41 per share, roughly in line with the current stock price, but that gives no credit for potential acquisitions. He said management is “very motivated” to pursue a deal, potentially this year.

If 5N increased leverage to 2.5 times EBITDA, Goldman estimates it could debt-finance nearly $350-million of acquisitions, which he said would be more than 20% accretive to his 2027 estimate.

He also highlighted 5N’s recent US$18.1-million U.S. Department of War grant to expand germanium refining capacity at its Utah facility by seven times. While revenue impact is not expected until 2028, Goldman said the opportunity could be material.

“At the current valuation, the market is giving the company zero credit for potential M&A and a growing defence opportunity underscored by the recent U.S. Department of War grant,” he added.

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