Canaccord initiates coverage on Agronomics at 'buy'

Analysts at Canaccord Genuity initiated coverage on cellular agriculture company Agronomics with a 'buy' rating and 19.0p target price on Monday, stating the group was "healthy, sustainable, kinda - and profitable".

Canaccord stated global food production was "in crisis", with nearly all available arable land in use, mainly to grow feed grain for livestock, and said there was "little scope" to further increase resource inputs due to damage to the wider ecosystem. It also noted wild fish catch peaked more than 20 years ago and said aquaculture was causing further problems.

However, the Canadian bank said Agronomics provided long-term solutions to produce food and materials through sustainable, cellular agriculture, providing increased food security. It also noted other key benefits included "tastier, healthier, contamination-free food", no "intrinsic cruelty", much lower resource inputs, and reduced antibiotic degradation.

"Addressable markets for its companies are vast, in both food and materials, based on both animal and plant precursors, and the processes are moving rapidly towards being cost competitive," said Canaccord.

"We believe Agronomics' strategy of early-stage involvement offers the potential for outsize gains, some already demonstrated."

As an investment company, Canaccord said Agronomics trades on net asset value and stated its price target of 19.0p means the stock would trade at 1.3x its estimate of end-June net asset value.

"We believe there is considerable scope for further value uplifts as its portfolio companies mature," added the analysts.

Reporting by Iain Gilbert at Sharecast.com