RE: Canaccord Genuity sets a target price of 325p so hardly a multibagger24 Mar 2026 15:23
Broker update as requested (part 1):
Itaconix delivered another record year
Revenue for 2025 was $10.5mn, up 61% y/y, with gross margin of $3.6mn, also up 61% y/y, meaning gross margin is being held constant (and higher than pre-2024) even as revenue grows rapidly. This also means four consecutive half-years of increased revenue. EBITDA loss fell to $0.6mn (from $1.8mn in 2024) with cash at year-end of $4.4mn. Management continues to expect positive adjusted EBITDA for 2026, with further strong revenue growth. In 2025 the company delivered on multiple strategic initiatives: increasing adoption in Europe, re-landing its North American detergent customers at higher margin, increasing odour neutralization revenue, and gaining traction in the high-potential BIO*Asterix product. We continue to expect positive free cash flow as early as 2027, on continued rapid adoption of Itaconix's unique bio-based specialty ingredients across both existing and new customers. The company remains remarkably low in capital intensity, generating revenue nearly 10x fixed assets, and operating at roughly one-third capacity utilisation. Given wider macro uncertainties we are making no changes to forecasts with this note; Itaconix's consumer staple end markets and rapidly increasing customer penetration should keep it well insulated. We remain BUYers with an unchanged target of 325p.
European segment: At $3.9mn, Performance Ingredient sales in EMEA more than doubled in the year, with increased adoption of scale inhibitors in dishwash tabs both with new and existing customers. We expect 2026 to see continued growth in a market which has strong consumer preferences for biobased formulations. Sales continue to be broadly spread across multiple customers and geographies.
North American cleaning: In 2025, Itaconix brought eight new formulations into production from its SPARX program in North America, with another seven already scheduled for 2026 production, and two in evaluation. Success here has been key to rebuilding the sales funnel after 2024, and revenue is now at similar levels to pre-2024 but notably higher gross margin.
Earnings outlook: on track for positive EBITDA At $4.4mn, year-end cash remains robust; the company continues to operate with relatively high inventory ($2.7mn), both cushioning supply chain risks but also some potential for improvement. We note 2025 saw gross margin up $1.4mn and adjusted EBITDA improvement of $1.2mn, and expect a similar absolute rate of improvement in gross margin in 2026 to drive positive EBITDA this year. We are making no changes to our earnings with this note.
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