MustGrow Biologics Corp. (TSX-V:MGRO, OTCQB:MGROF)’ acquisition of NexusBioAg “dramatically changes” the revenue outlook for the company in 2025, analysts at Noble Capital Markets believe.
Last week, the company announced it finalized the acquisition of NexusBioAg for a cash payment of approximately C$1.6 million and earn-out payments totalling a percentage of gross margin on certain itemized products sold by the company in 2025 and 2026.
Management said NexusBioAg will contribute between $15 and $20 million in revenue to MustGrow in 2025 and 2026.
“We believe profitability is expected to be at similar levels to management expectations of Nexus being breakeven for 2025,” Noble’s analysts wrote in a note to clients.
“However, it may be too conservative should management realize synergies more quickly than anticipated. We estimate revenue of C$16 million and a net loss of C$2.2 million, or C$0.04 per share.”
The analysts also see the acquisition as providing MustGrow with an experienced sales team that can support NexusBioAg’s and MustGrow’s products.
They repeated their ‘Market Perform’ rating and US$1.25 price target on MustGrow.
Shares of MustGrow have added almost 40% in the year-to-date, trading at US$1.25.
“We believe substantial opportunity exists for natural alternatives in the company's targeted end markets, such as preplant soil fumigation, bioherbicides, postharvest food preservation, soil amendment, and biofertility,” analysts concluded.