5N Plus: this analyst just hiked his price target

Ventum Capital Markets analyst Daniel Lavoie raised his target on 5N Plus (5N Plus Stock Quote, Chart, News, Analysts, Financials TSX:VNP) to $45.00 from $44.00 following stronger-than-expected third-quarter results, saying improving margins and growing demand from renewable energy, medical imaging and space applications support further earnings growth.

Lavoie maintained his “Buy” rating on the Montreal-based specialty semiconductor and advanced materials manufacturer, raising his revenue and earnings forecasts through 2028.

“We believe Q3/26 results should alleviate investor concerns surrounding margin pressures, with adjusted gross margin expanding 110bps QoQ to 31.4%,” Lavoie said in his Nov. 3 report, .

The analyst thinks operating inefficiencies and higher costs had weighed on margins during the second quarter, but management indicated that most operational issues have been resolved. “Management confirmed that most operational issues have been addressed, with stronger volumes and economies of scale driving the sequential improvement,” he wrote.

Although higher commodity costs remain a concern, Lavoie expects additional price adjustments under customer contracts to support further margin improvement. “While commodity inflation remains a headwind, additional contractual cost pass-throughs, expected to be substantially completed by mid-2027, should support further margin recovery,” he said.

5N Plus reported record third-quarter Adjusted EBITDA of US$31.1-million, supported by stronger production volumes and improved operating efficiency.

Lavoie said management’s full-year guidance remains conservative, leaving room for results to exceed expectations.

He increased his fiscal 2026 revenue forecast to US$502-million from US$487-million and his Adjusted EBITDA estimate to US$112.4-million from US$109.4-million. His revised Adjusted EBITDA forecast exceeds management’s guidance of US$100-million to US$105-million.

Lavoie expects fourth-quarter Adjusted EBITDA of US$25.6-million on revenue of approximately US$125-million, below the record profitability achieved in the third quarter.

Beyond 2026, he expects several businesses to contribute to growth. Contracted demand for materials used in terrestrial renewable energy applications continues to increase through 2027 and 2028, providing greater visibility into future revenue.

Lavoie also expects improving demand from medical imaging customers, along with opportunities in sensing applications and specialty metals, including germanium processing. He said cadmium selenide supplied to First Solar should make a more meaningful revenue contribution in the second half of 2027.

In the company’s Performance Materials business, he sees potential market share gains in health and pharmaceutical bismuth products following the loss of manufacturing certification by its closest competitor.

Space applications represent another longer-term growth opportunity. Lavoie said European satellite programs, including the IRIS² constellation, are expected to finalize supplier arrangements during 2027 ahead of planned deployments beginning in 2029. He believes 5N Plus’s AZUR subsidiary, which produces solar cells for spacecraft, is positioned to benefit from the resulting increase in demand.

Management is evaluating a larger expansion of AZUR’s manufacturing capacity, beyond its historical annual increases of 25% to 35%. Lavoie said the expansion could significantly increase the scale of the space business between 2029 and 2031 as satellite production accelerates.

Following the quarterly results, he raised his fiscal 2027 revenue forecast to US$578-million from US$554-million and his Adjusted EBITDA estimate to US$141-million from US$136-million. For fiscal 2028, he increased his revenue estimate to US$668-million from US$613-million and his Adjusted EBITDA forecast to US$170-million from US$154-million.

Lavoie said stronger operating performance, improving margins and a broader range of growth opportunities support his higher valuation.

The analyst expects 5N Plus to generate Adjusted EBITDA of US$112.4-million on revenue of US$502-million in fiscal 2026.

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