Maxim Group has adjusted its financial outlook for Moolec Science SA (NASDAQ: MLEC), reducing the price target from $6.00 to $3.00, while retaining a Buy rating on the stock.
The revision followed Moolec Science's announcement of its fiscal fourth-quarter results on Wednesday, which showed revenues surpassing the firm's expectations, although the loss per share was slightly wider than anticipated.
The reported figures were influenced by the International Accounting Standards (IAS) 29, which pertains to financial reporting in hyperinflationary economies. Even after excluding these adjustments, normalized revenue would have exceeded Maxim Group's projections.
Moolec Science, a company specializing in plant molecular farming (PMF), confirmed on September 5, 2024, that it would harvest its genetically engineered plant-grown products, GLASO and Piggy Sooy, in the United States in October 2024.
The company's PMF ingredient products are on schedule, with GLASO expected to hit the market in the first half of calendar year 2025, and Piggy Sooy projected to launch by calendar year 2028 or possibly earlier.
As of June 30, 2024, Moolec Science reported having $5.4 million in cash and equivalents, against an estimated $2.5 million in debt. The company forecasts a quarterly cash burn rate of approximately $3.5 million through the fiscal year 2025 but anticipates having enough capital to continue operations until at least the second fiscal quarter of 2025 (December 2024).
Moolec reported a substantial increase in its revenue to $5.8 million, up from $1 million in the previous year, during its fourth quarter and full fiscal year 2024 earnings call. The company's operating expenses also rose to $9.3 million, primarily attributed to non-cash items and consolidation costs. Among the key takeaways, Moolec Science announced plans to commercialize its Glaso product and expects it to contribute approximately 15% to the projected $6 million revenue for the soy protein ingredient business in 2025.
The company is also expanding its research and development, focusing on new proteins and molecular products. A significant development is the anticipated offtake agreement for Glaso with a major global CPG company, which is expected to yield 50 to 60 tons of GLA in its first year. Field trials for the Piggy Sooy product are ongoing in Missouri, Ohio, and Iowa, with the aim of securing FDA approval.
Moolec Science is also establishing a new operational hub in the U.S to enhance team collaboration and efficiency. Despite the increase in operating expenses, the company remains optimistic about its growth trajectory. Notably, a three-year offtake agreement for Glaso has been signed with a major global CPG company, indicating strong market demand.
InvestingPro Insights
Recent InvestingPro data provides additional context to Moolec Science's financial situation and market performance. The company's market capitalization stands at $33.81 million, reflecting its current valuation in the market. Despite Maxim Group's optimistic Buy rating, InvestingPro Tips highlight some challenges facing MLEC. The company is "quickly burning through cash" and has "short term obligations exceed[ing] liquid assets," which aligns with the article's mention of the company's limited cash reserves and high burn rate.
InvestingPro Tips also indicate that MLEC is "not profitable over the last twelve months" and "analysts do not anticipate the company will be profitable this year." This is consistent with the wider losses reported in the article and Maxim Group's revised estimates. The company's gross profit margin for the last twelve months as of Q3 2024 stands at a low 8.01%, supporting the InvestingPro Tip that MLEC "suffers from weak gross profit margins."
On a more positive note, MLEC has seen a "significant return over the last week," with a 9.36% price total return. However, this should be viewed in the context of longer-term performance, as the stock has experienced a substantial decline of 70.3% over the past year.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for MLEC, providing a deeper understanding of the company's financial health and market position.
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