Canaccord Genuity Recommends Buy Call on ELSE Nutrition; Target C$6.50 Per Share
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The innovative baby food formula developer ELSE Nutrition rose to capital markets’ awareness in the past year providing world’s only alternative to cow-milk and soy-based infant formula. The Toronto Stock Exchange traded company (TSXV:BABY) launched baby food products under the “ELSE” brand that were acclaimed by thousands of parents and pediatricians in the US stating the formula was nothing short of a revolution of infant nutrition.
ELSE has been outperforming market expectations since inception, hitting all major milestones in its development and now launches its products into the US market on Amazon and nationwide retail stores.
Else has developed the first 100 percent plant-based non-dairy and non-soy formula that is nutritionally equivalent to breast milk. It is made of a patented (until 2034) blend of 92 per cent almonds, buckwheat and tapioca that is certified USDA organic, vegan, natural and free of hormones, antibiotics, gluten, hexanes, GMOs, palm oil and corn syrups. Else is building out a portfolio of products centered on this novel nutrition formula. Including sales of infant formula, toddler/children complete nutrition drinks, and complementary nutrition baby food, we forecast Else's global sales to grow to almost $1 billion by 2026 (200 per cent CAGR) with approximately $127 million in EBITA.
Leading Canaccord food-tech analyst, Tania Gonsalves, has initiated coverage with a speculative buy rating for the innovative baby formula developer targeting C$6.50 (currently trading at C$4.30).
In her research, Gonsalves points that her financial forecast, while aggressive, still leaves room for an upside: “The majority of our revenue forecast is attributable to new products launched in the US, EU5, Canada, Australia/NZ and/or China (cross-border). Toddler formula was launched this year and is expected to be followed by baby and children products next year (potential near-term catalysts) and infant formula in 2023-24. At peak, we forecast ELSE wins 15 per cent of specialty infants, 10 per cent of toddlers, 5 per cent of babies and 2 per cent of children. This yields sales of almost $1 billion by 2026. For now, we exclude the domestic China market (cross-border is only around 20 per cent of total), non-specialty categories (e.g., organic cow's milk) and adult nutrition products, leaving room for upside to our numbers. As sales growth yields operating leverage, we project adjusted EBITDA margin expands to 13 per cent by 2026.”
The research notes ELSE team’s deep expertise, it’s innovative product line, the strong cash position and growing US$75 billion potential market as the main drivers for ELSE’s potential future success.
ELSE has become one of the most interesting companies to watch in the food-tech arena, resembles in many ways the meteoric rise of Beyond Meat. It has attracted a multitude of followers with a growing fan-club among US and Canadian parents and pediatricians it rapidly gains the interest of leading investment banks such as Canaccord Genuity and others.
The full research is publicly available on the Canaccord Genuity website at this link.