Shore Capital believes Light Science Technologies Holdings PLC (AIM:LST, FRA:9FD) offers 150% upside to the current price of its shares, arguing that its move into supplying a fire-resistant cladding remediation product could transform its financial profile over the next two years.
The broker has a fair value of 4.6p per share on Light Science, against a current price of 1.82p, derived from a discounted cash flow model focused solely on its passive fire protection division reaching £20 million in annual revenue.
That target looks more credible following the company's first supply order for Injectaclad, a graphite barrier system used to treat fire-risk cladding without requiring full facade removal, secured within two weeks of completing the acquisition of RLUK Injection Ltd in April.
The £410,000 contract, covering a five-storey residential building in East Yorkshire, is modest in isolation, but Shore Capital's analysts Rob Sanders and Akhil Patel view it as proof that the commercial model is working, with five of eleven accredited installation contractors already placing product commitments.
The significance of the acquisition is structural. Before buying RLUK, Light Science operated solely as an installer; it now sits higher up the value chain as a material supplier, a position that should command better margins on the same underlying demand.
That demand is being driven in part by the Building Safety Regulator, the body overseeing cladding remediation programmes, which continues to push for faster resolution of cases still in its approval pipeline.
Shore Capital acknowledged its 4.6p valuation is conservative, noting that if the company's agricultural technology division also gains traction, the fair value could be a multiple of that figure.