Why This Codexis Analyst Is Confident Stock Is Worth $6

• H.C. Wainwright analysts Swayampakula Ramakanth and Sean Lee initiated coverage on Codexis, Inc. CDXS with a Buy rating.
• The experts set a $6.00 price target, which implies an upside of more than 41 percent from current valuations.
• The main element supporting their bullish thesis is the company’s leading position in the customized biocatalysts market.

In a report issued Wednesday, analysts at H.C. Wainwright initiated coverage on Codexis, a micro cap company that develops high-efficiency biocatalysts, with a Buy rating and $6.00 price target.

The company’s biocatalysts are currently used to manufacture a number of leading drugs including Januvia, Lipitor, and Zocor. Moreover, Codexis has ongoing research agreements with some of the main pharma players including Merck & Co., Inc. MRK and GlaxoSmithKline plc (ADR) GSK, and is “well on its way to penetrate other industries,” the research note assured.

The analysts believe the biocatalysis market offers a $13 billion opportunity within pharmaceutical manufacturing alone and expect Codexis’ rare technology platform and business strategy to drive substantial growth in the next few years to come.

Based on H.C. Wainwright’s financial model, the experts anticipate revenues will grow from $42 million in 2015 to $103 million in 2020, resulting in a 20 percent CAGR. In addition, they expect the company to reach profitability in 2017.

A few couple of other elements to take into account when considering an investment in Codexis are:

• Its potential for growth outside the pharmaceutical industry – into food, agriculture, chemicals, personal care, etc.
• Its upside potential from internal programs – especially from the development of a novel therapy for the treatment of phenylketonuria.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.