Burcon NutraScience Corp (TSX:BU, NASDAQ:BRCN) is the plant-based pick for 2022, according to Beacon Securities.
The research firm said the food company has a compelling value proposition with its differentiated and proprietary offering in the red-hot, plant-based food industry.
Beacon has a Buy rating and an $8 price target on the company.
READ: Plant-based protein is fast-growing opportunity for food companies, says UBS
In a note recently, Beacon analysts offered a number of reasons why they think Burcon is poised to break out.
Beacon noted that Burcon, through its joint venture Merit Functional Foods, does not compete directly in the consumer packaged goods (CPG) market, but rather uses its patented intellectual property (IP) to provide CPG companies with the ingredients that they can use to differentiate their products.
“The bottom-line is that Merit, together with Burcon’s IP, provides CPGs with the ingredients that they require to differentiate their products, specifically around protein content, taste and texture – all of which will become increasingly important as the industry grows yet becomes more competitive,” analysts wrote in a note.
Another factor exciting Beacon? A significant investment by Bunge Limited, the St Louis-based food company that owns a 30% stake in Merit.
“Merit, but more particularly, Burcon given it owns the IP, could become key to Bunge becoming a key player in this industry,” analysts noted.
Beacon speculated that Bunge could pay $400 to $500 million for the technology behind Merit’s facility, which is 100% owned by Burcon.
Beacon said its analysis shows that the shares of Burcon have an exceptional risk-return profile. Burcon is currently trading around C$1.42 on the Toronto Stock Exchange.
“The key, in our opinion, will be the quality of the proteins from the plant and CPGs acceptance of them, which should be known in the next (six) months or so,” Beacon analysts wrote.
“With a short knowledge fuse, significant upside potential and BU with $11 million with cash, we believe investors should take advantage of this share price weakness.”
Vancouver-based Burcon is a global technology leader in the development of plant-based proteins for foods and beverages that has amassed an extensive patent portfolio covering its novel plant-based proteins derived from pea, canola, soy, hemp, sunflower seed, among other plant sources.
Contact Angela at angela@proactiveinvestors.com
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