Arcadia Biosciences Could Nearly Double, Credit Suisse Says

In a report published Tuesday, Credit Suisse analyst Christopher Parkinson initiated coverage of

with an Outperform rating and $14 price target, as the company is a "best-in-class" agricultural technology company that is poised to benefit from the secular need to enhance yield productivity per hectare. "Contributing to Arcadia's unique story is its focus on productivity and efficiency traits across a vast array of global crops, including wheat, rice, and soybeans," Parkinson wrote. "Arcadia is differentiated by its ability to cross license its products to multiple seed producers; at present, Arcadia has 13 products in Phase III or later." Parkinson said that Arcadia Biosciences currently has more than 40 programs ranging across seven broad platforms. Some of the key platforms include nitrogen use efficiency (NUE), water use efficiency (WUE), and salt tolerance (ST), among others. The company can further leverage its programs in areas where it is unpenetrated such as Southeast Asia and Central Asia. Parkinson also noted that Arcadia Biosciences' first royalty payment streams will begin in 2018, with the majority of programs reaching commercialization in the following five years. As such, the analyst is expecting cash flow and EBITDA break-even in the 2019 to 2020 time frame. Prior to 2019, the company has near-term catalysts in the form of phase advancements (40 products with five phases) in addition to new collaboration and licensee agreements for product decimation across the globe. The analyst's $14 price target utilizes a 24 percent discount rate and assumes risks pertaining to product phase advancements, licensee risk, emerging market country risk and product ramp-up timing. However, if one (or more) of these risks is mitigated, shares could be valued in the $20 to $22 range.