Brookline starts BioCeres Crop Solutions at buy; PT $13

Brookline Capital Markets initiated coverage of BioCeres Crop Solutions (NASDAQ:BIOX) with a “buy” rating and $13 price target. The stock closed at $4.95 on Feb. 4.

BioCeres is the market leader in South America, providing agricultural solutions that enhance crop nutrition and improve crop productivity. The company has developed a biological application called HB4, which when applied to seeds, offers drought and herbicide resistance. Currently available in corn and soybean, as EcoCorn and EcoSoy seeds, BioCeres is now expanding its regulatory approvals beyond South America.

Analyst Sally Yanchus writes that the launch of EcoSoy in the U.S. and China could “transform BioCeres, potentially more than doubling the current annual revenue base of $180-million by 2023.”

Ms. Yanchus said the global market for agricultural biological crop offerings, including seeds, is estimated to be $56-billion and growing. “Given the current demographic trends of increasing global population, an expanding middle class and a trend towards urbanization, demand for higher crop yields is growing,” she said. “And this demand cannot be met by conventional farming alone. Biotechnology-based agriculture or AgBio products offer a viable avenue to meet this demand.”

BioCeres currently trades at six times estimated 2020 enterprise value/EBITDA, well below its global peer group average of 11.4 times, Ms. Yanchus said. “Some of this may be due to the fact that BioCeres is an Argentinian company, with the associated political and currency risks.”