caught the attention of Oak Ridge Financial as it just initiated research coverage on the cleantech solutions firm with a Buy rating, reported analyst Richard Ryan in a September 12 note.
"BioLargo's strategic focus on finding/creating sustainable environmental solutions tap into very large market opportunities . . . initial commercialization results are starting to attract investor attention," Ryan wrote.
The California-based company invents, develops, and commercializes novel platform technologies to solve global environmental problems, including control of PFAS (perfluoroalkyl and polyfluoroalkyl substances) contamination, VOCs (volatile organic compounds), industrial odors, air quality, and infections, as well as advanced treatment of water and wastewater, explained Ryan.
Notable Investor Return
Along with a Buy rating, Oak Ridge Financial assigned a target price of US$0.35 per share to BioLargo, the current share price of which is about US$0.18, noted Ryan.
The difference between these two prices implies an attractive potential return for investors of 94%.
Key Points About Company
Ryan presented three factors that make BioLargo a compelling investment.
1) Strategic business model. The company's hub-and-spoke business model involves inventing or acquiring a product, proving it out, partnering with related third parties, and then commercializing the product. As such, BioLargo has numerous subsidiaries and partners, including Garratt-Callahan, the largest privately owned industrial water treatment company in North America.
"By structuring the company and commercializing technologies through operating subsidiaries, BioLargo diversifies overall risk while providing solutions to diversified end markets," Ryan wrote.
2) Profitability on horizon. BioLargo is expected to turn profitable in the late fiscal year 2025, by which time a significant number of retailers are expected to have secured contracts and orders for Pooph, the company's pet odor control product. BioLargo's marketing partner Ikigai anticipates having 20,000-plus retail stores under contract by year-end 2023. After the commercial rollout of Pooph began late last year, it generated US$3.1 million ($3.1M) in Q1/23 and US$798,000 in Q2/23 in sales.
Another of BioLargo's products already on the market is CupriDyne Clean, its industrial odor remover.
3) More products, multiple shots on goal. The next BioLargo product likely to start generating revenue is Bioclynse, a copper iodine wound-healing irrigation solution, for which the majority-owned subsidiary Clyra Medical Technologies is currently seeking a national channel partnership with a medical product distributor.
"Based on our estimates, we believe that the projected success of Pooph, alongside the current valuation of Clyra Medical, provides investors with underlying support and a conservative degree of upside, while the diverse array of technologies within BioLargo's portfolio offers investors an interesting 'call option,' if you will," Ryan wrote.
Other BioLargo products include:
- Aqueous Electrostatic Concentrator (AEC), for removing PFAS from water
- Advanced Oxidation System (AOS), a water treatment device
- Sodium Sulfur Long-Duration Energy Storage, a battery alternative to lithium-ion
"BioLargo has established an impressive pipeline of technologies that are in various stages of development," Ryan wrote. "Over 100 government grants, numerous pilot projects, and over 20 patents in air, water and infection discoveries have been advanced."
Current Financial Highlights
Ryan highlighted that BioLargo's revenue in H1/23 of US$5.2M was up 127% year over year. This amount compares to full-year 2022 revenue of US$5.9M.
The company's net loss for Q2/23 was US$1.6M versus US$1.3M in Q2/22 and $494,000 in Q1/23.
Regarding capitalization, BioLargo has 287M common shares outstanding and 148M reserved shares. Only 0.54% of shares are owned by institutions.
Who Comprises Management
At the helm is Dennis P. Calvert, president and chief executive officer (CEO) of the parent company BioLargo Inc. and chairman of the board.
Other executives include Joseph L. Provenzano, the founder, president and CEO of ONM Environmental, one of BioLargo's operating segments.
Randall Moore is the president of BioLargo Engineering, Science & Technologies, providing engineering support to all corporate entities.
Dr. Richard Smith oversees research and development efforts at BioLargo Water, another supporting entity.
BioLargo's engineering team has decades of experience, including employment at the global industrial groups, CB&I and The Shaw Group, Ryan noted. This benefits BioLargo greatly, given that engineering is at the forefront of what it does.
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- BioLargo Inc. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of BioLargo Inc.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
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Disclosures for Oak Ridge Financial, BioLargo Inc., September 12, 2023
Analyst Certification: I, Richard Ryan, certify that the views expressed in this research report accurately reflect my personal views about the subject company and its securities. I also certify that I have not been, am not, and will not be receiving direct or indirect compensation related to the specific recommendations expressed in this report.
Important Disclosures: The analyst or a member of his/her household does not hold a long or short position, options, warrants, rights or futures of this security in their personal account(s). As of the end of the month preceding the date of publication of this report, Oak Ridge Financial did not beneficially own 1% or more of any class of common equity securities of the subject company. There is not any actual material conflict of interest that either the analyst or Oak Ridge Financial is aware of. The analyst has not received any compensation for any investment banking business with this company in the past twelve months and does not expect to receive any in the next three months. Oak Ridge Financial has been engaged for investment banking or advisory services with the subject company during the past twelve months and does anticipate receiving compensation for such services in the next three months. Oak Ridge Financial has not served as a broker, either as agent or principal, buying back stock for the subject company’s account as part of the company’s authorized stock buy-back program in the last twelve months. No director, officer or employee of Oak Ridge Financial serves as a director, officer or advisory board member to the subject company.
Other Disclosures: The information contained in this report is based on sources considered to be reliable, but not guaranteed to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. This report has been prepared solely for informative purposes and is not a solicitation or an offer to buy or sell any security. The securities described may not be qualified for purchase in all jurisdictions. Because of individual requirements, advice regarding securities mentioned in this report should not be construed as suitable for all accounts. This report does not take into account the investment objectives, financial situation and needs of any particular client of Oak Ridge Financial. Some securities mentioned herein relate to small speculative companies that may not be suitable for some accounts. Oak Ridge Financial suggests that prior to acting on any of the recommendations herein, the recipient should consider whether such a recommendation is appropriate given their investment objectives and current financial circumstances. Past performance does not guarantee future results. Additional information is available upon request.