UPDATE: Craig-Hallum Starts PureCycle Technolgies (PCT) at Buy Noting High Margin, Oversubscribed Services
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Craig-Hallum initiates coverage on PureCycle Technolgies (NASDAQ: PCT) with a Buy rating and a price target of $48.00 as the “No-Compromise” Solution for taking post-consumer and post-industrial waste-PP through a solvent-based physical extraction process using standardized equipment to produce virgin-like recycled PP. The company's patented process uses 75% less energy than traditional virgin PP production with material (often old carpet) acquired for pennies on the dollar. PCT is seeing substantial customer demand given these benefits, with Plant 1 over 2x oversubscribed and contracted at ~$0.90/lb. and current discussions and contracts for future plants at $1.50-$2.00/lb., resulting in 55%+ EBITDA margin targeted as its initial plants are fully ramped in 2024.
The analyst stated "Given strong demand and pricing, we believe PCT is on a path towards $1.1B+ in revenues, $775M+ in EBITDA and a $125+ stock price in the coming years." "Don’t take our word for it, listen to its long-list of strategic partners. This demand for a sustainable recycled polypropylene solution must not in any way impact the quality of the product (color and odor needs for consumer products). We think strategic partners including Procter & Gamble (P&G), Total SA, Aptar, L’Oreal, and Ravago putting PureCycle’s process and output through exacting standards is strong validation. Our in depth checks on the proprietary process and strategic importance is best summed up by one customer saying PureCycle “can’t build plants fast enough” to meet its future objectives."
Shares of PureCycle Technolgies closed at $33.00 yesterday.
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