BioLargo Inc. (BLGO:OTCQB) caught the attention of Oak Ridge Financial as it just initiated research coverage on the cleantech solutions firm with a Buy rating, reported analyst Richard Ryan in a Sept. 12 note.
"BioLargo's strategic focus on finding/creating sustainable environmental solutions tap into very large market opportunities. . .initial commercialization results are starting to attract investor attention," Ryan wrote.
The California-based company invents, develops and commercializes novel platform technologies to solve global environmental problems, including control of PFAS (perfluoroalkyl and polyfluoroalkyl substances) contamination, VOCs (volatile organic compounds), industrial odors, air quality and infections, as well as advanced treatment of water and wastewater, explained Ryan.
Notable investor return
Along with a Buy rating, Oak Ridge Financial assigned a target price of $0.35 per share to BioLargo, the current share price of which is about $0.18, noted Ryan.
The difference between these two prices implies an attractive potential return for investors, of 94%.
Key points about company
Ryan presented three factors that make BioLargo a compelling investment.
1) Strategic business model. The company's hub-and-spoke business model involves inventing or acquiring a product, proving it out, partnering with related third parties then commercializing the product. As such, BioLargo has numerous subsidiaries and partners, including Garratt-Callahan, the largest privately owned industrial water treatment company in North America.
"By structuring the company and commercializing technologies through operating subsidiaries, BioLargo diversifies overall risk while providing solutions to diversified end markets," Ryan wrote.
2) Profitability on horizon. BioLargo is expected to turn profitable in about late fiscal year 2025, by which time a significant number of retailers are expected to have secured contracts and orders for Pooph, the company's pet odor control product. BioLargo's marketing partner Ikigai anticipates having 20,000-plus retail stores under contract by year-end 2023. After the commercial rollout of Pooph began late last year, it generated $3.1 million ($3.1M) in Q1/23 and $798,000 in Q2/23, in sales.
Another of BioLargo's products already on the market is CupriDyne Clean, its industrial odor remover.
3) More products, multiple shots on goal. The next BioLargo product likely to start generating revenue is Bioclynse, a copper iodine wound-healing irrigation solution, for which the majority owned subsidiary Clyra Medical Technologies is currently seeking a national channel partnership with a medical product distributor.
"Based on our estimates, we believe that the projected success of Pooph, alongside the current valuation of Clyra Medical, provides investors with underlying support and a conservative degree of upside, while the diverse array of technologies within BioLargo's portfolio offers investors an interesting 'call option,' if you will," Ryan wrote.
Other BioLargo products include:
- Aqueous Electrostatic Concentrator (AEC), for removing PFAS from water
- Advanced Oxidation System (AOS), a water treatment device
- Sodium Sulfur Long-Duration Energy Storage, a battery alternative to lithium ion
"BioLargo has established an impressive pipeline of technologies that are in various stages of development," Ryan wrote. "Over 100 government grants, numerous pilot projects and over 20 patents in air, water and infection discoveries have been advanced."
Current financial highlights
Ryan highlighted that BioLargo's revenue in H1/23 of $5.2M was up 127% year over year. This amount compares to full-year 2022 revenue of $5.9M.
The company's net loss for Q2/23 was $1.6M versus $1.3M in Q2/22 and $494,000 in Q1/23.
Regarding capitalization, BioLargo has 287M common shares outstanding and 148M reserved shares. Only 0.54% of shares are owned by institutions.
Who comprises management
At the helm is Dennis P. Calvert, president and chief executive officer (CEO) of the parent company BioLargo Inc. and chairman of the board.
Other executives include Joseph L. Provenzano, the founder, president and CEO of ONM Environmental, one of BioLargo's operating segments.
Randall Moore is the president of BioLargo Engineering, Science & Technologies, providing engineering support to all corporate entities.
Dr. Richard Smith oversees research and development efforts at BioLargo Water, another supporting entity.
BioLargo's engineering team has decades of experience, including employment at the global industrial groups, CB&I and The Shaw Group, Ryan noted. This benefits BioLargo greatly given that engineering is at the forefront of what it does.
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