Taglich Brothers said it has initiated coverage on Midwest Energy Emissions Corp. - ME2C - (OTCMKTS:MEEC) with a 'Speculative Buy' rating and a twelve-month price target of $3.00 per share.
In a note to clients, Taglich's analysts said: "We believe ME2C has taken the appropriate initiatives to ensure significant short and long-term growth. The company estimates at least 40 companies have infringed on their patents related to its mercury capture (SEA) technology and started filing lawsuits against those companies in 2019. While four lawsuits have already been settled, a dozen more companies have been notified."
"At a 70% conversion rate of potential customers into supply/licensing contracts, the company anticipates recurring annual revenue could exceed $100 million by 2023," they added.
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The analysts continued: "Near-term, ME2C is focused on helping utility customers meet emissions standards through its current technologies. Long-term, the company intends to bring new technologies to market to assure future growth. These new markets that address coal ash cleanup, wastewater remediation, and methane gas emissions from the oil and gas power industries, and improve the processing of rare earth elements, are likely to be higher-margin offerings."
For 2021, the Taglich analysts project ME2C's revenue more than doubling to $20.4 million from $8.2 million in 2020 and its net loss narrowing to $1.5 million or $(0.02) per share from $5.8 million or $(0.07) in 2020. For 2022, they project an 81.4% increase in revenue to $37 million and net income of $4.4 million or $0.05 per share.
"The significant improvement is due primarily to growth in the company’s product and licensing revenue stemming from patent infringement settlements," they said. "Our forecast reflects continued growth in the company’s product and licensing revenue stemming from patent infringement settlements and contribution from new environmental technologies."
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