HCW starts AquaBounty at buy; PT $3.75

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H.C. Wainwright launched coverage of AquaBounty Technologies (NASDAQ:AQB) with a “buy” rating and a “conservative” $3.75 price target. The stock closed at $2.99 on June 27.

AquaBounty is focused on enhancing productivity in the aquaculture market and is notable for its R&D on genetically modified fish.

Analyst Kevin Dede sees AquaBounty as the leading accelerating technology in creating and growing Atlantic salmon, arguably one of if not the healthiest protein choices as a key original source for the richest long-chain omega-3 fatty acids, EPA (eicosapentaenoic) and DHA (docosahexaenoic). 

“AquaBounty's unique and proprietary processes of character-enhancing gene manipulation has cut the Atlantic salmon growth time to maturity roughly in half (18-to-20 months vs. naturally occurring 28-to-36 month), improved feed conversion by 25%, and added roughly 50% to the maturity weight of its specifically-engineered fish, termed AquAdvantage Salmon (AAS), in half the time of its natural and farm-raised comparables,” he added. 

With its bio-engineering techniques proven after more than 13 generations since the initial 1989 fish and FDA approved for human consumption, Mr. Dede said AquaBounty now operates one land-based demo facility producing roughly 20 million tons of AquAdvantage Salmon annually, is in the process of opening a second demo plant in Canada and its main 1,200-million-ton production facility in Albany, Indiana. 

“Despite the 18-month AAS growth cycle, we think the Indiana facility should reach its full 1,200-million-ton annual run rate production during 2020, approaching $11-million to $14-million in sales by the end of that year, hamstrung only by the USDA's labeling mandate for its genetically engineered fish, a requirement we think should be met this summer,” he added.

“In already entertaining expansion scenarios, all told, AquaBounty could be capable of delivering more than 2,000 million tons in 2021,” Mr. Dede said.

Stephen Kilmer