Why Calyxt Stock Is Compelling At Current Levels

Shares of
Calyxt Inc
gained more than 7 percent Monday after analysts at BMO Capital Markets initiated coverage of the food and agriculture company with a bullish rating. The firm's Kenneth Zaslow slapped an Outperform rating on
Calyxt's stock with a $32 price target.

Calyxt is considered to be a best-in-class food company that focuses on gene-editing technologies, the analyst wrote. Calyxt's gene editing technique called TALEN boasts several attributes that overcome shortcomings of traditional genetically modified methods, including:

    1. Not being classified by the USDA's Plant Protection Act as being a regulated article.
    2. A focus on consumer-concentric non-GMO food ingredient products.
    3. A shorter and more cost-effective development cycle.

Compared to other gene editing technologies, Calyxt holds an advantage in three key areas, including:

    1. Greater specificity.
    2. Greater precision and accuracy.
    3. A strong IP exclusivity.

Looking forward to 2018, Calyxt will launch its high oleic (soybean oil) SBO product that could generate peak year revenue of at least $800 million, the analyst said.

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"We are encouraged that management prioritizes R&D over the rapid expansion of high oleic oil, as we expect management to control its high oleic oil expansion and cost structure vs. decreasing its R&D spending, Zaslow wrote.

But there is more to the company's pipeline, including the potential to launch at least four new products over the next 10 years. In the meantime, management continues to exercise financial discipline and the proceeds from its recent initial public offering will support the company's cash needs through 2018 and possibly into 2019.

At publication, shares of Calyxt were up 5.06 percent at $23.61.

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Posted In: Analyst ColorLong IdeasNewsCommoditiesInitiationMarketsAnalyst RatingsMoversTrading IdeasBMO Capital MarketsfoodFood CompaniesGene EditingKenneth ZaslowTALEN