Eden Research PLC (AIM:EDEN, OTCQB:EDNSF) now has four potential growth drivers after considerably expanding its end market opportunity portfolio during the pandemic and so, says broker Cenkos, its shares are worth buying.
Cenkos, which is house broker to the company, reinstated its ‘buy’ rating as it introduced forecasts for the 2022 and 2023 financial years.
The four potential growth drivers for Eden are its two EU-authorised core products of Mevalone and Cedroz, a third terpene-based product in development (an insecticide), the Sustaine microencapsulation development and the new seed treatments being developed in partnership with Corteva.
Looking at the two, and soon to be three, terpene-based products, Cenkos analyst Chris Donnellan said: “Eden’s products offer a number of key advantages over traditional chemical pesticides, including no maximum residue levels, limited pre-harvest treatment interval and organic input approval in the EU.
“We believe these attributes and a move away from potentially harmful chemical pesticides will support in-market growth of Eden’s pesticide portfolio.”
On microencapsulation, the analyst said that with agricultural use of plastics being a major source of environmental pollution, he expects this to drive manufacturers towards non-plastic alternative technologies such as Sustaine, where Eden has engaged with a number of companies to explore the potential to use the technology.
As for the partnership agreed with Corteva, Eden said this week that a seed treatment product could launch in time for the 2024 growing season and has the potential to deliver over €20m of revenues to Eden per year, in the short-term following launch.
Reintroducing forecasts for the current and next year, Cenkos forecasts Eden’s revenue from Mevalone and Cedroz will rise from the £1.4mln in 2021 to £1.7mln in 2022 and £2.8mln in 2023, largely from sales in the EU and assuming authorisation from the US Environmental Protection Agency is followed by launch and sales there in 2023.
“Should new product development and launch progress faster than we currently anticipate, FY23E revenues could be over 50% higher than we current forecast,” Donnellan said.
“We believe Eden Research has significantly broadened its market opportunities during the pandemic, and while near term revenues have been affected by COVID-19, we believe the company is in a far stronger position at the start of 2022 than it was pre-pandemic.”