caught the interest of Alliance Global Partners, which initiated research coverage on it with a Buy rating, reported analyst Jake Sekelsky in a Feb. 17 research note. This industrial technology company develops and produces next-generation materials that are smaller, safer and more efficient, and functional for various industries, including automotive, 5G communications, consumer electronics, and clean energy.
"We believe Meta's solutions have the potential to disrupt various end markets," Sekelsky commented.
Attractive Investment Opportunity
Alliance assigned a US$2 per share price target to Meta Materials, the current share price of which is about US$0.73, noted Sekelsky. The difference between these prices implies a significant potential return for investors.
Further, the Nova Scotia-based company is trading at a multiple below that of peers, Sekelsky pointed out. Whereas companies operating in Meta's target markets are trading at an average multiple of 25.5 times consensus-estimated 2024 revenue, Meta is trading at about 3.1 times Alliance-estimated 2024 revenue.
"We believe this multiple has the potential to trend higher as commercialization efforts and derisking of products take hold over the next year," added Sekelsky.
The analyst discussed Meta Materials' opportunities for revenue growth.
No. 1 Potential Catalyst
One highly prospective business line is in batteries, in which the company is now working on commercializing its NPORE nano-ceramic battery separators and PLASMAfusion (NCORE) coated current collectors. Both are compatible with all lithium-ion batteries on the market.
As such, the Canadian tech firm is "at the forefront of the energy transition space" and well-positioned to capture market share in the longer term, Sekelsky wrote.
Also, in partnership with DuPont Teijin Films and Mitsubishi Electric Europe, Meta Materials is using its technology "to scale a proprietary, high-volume, roll-to-roll manufacturing system for film-based, coated copper current collectors," Sekelsky relayed.
He added, "We expect news with respect to the potential partnership and test work in Meta's battery materials vertical to serve as a primary catalyst over the medium term."
More Revenue Opportunities
Sekelsky highlighted that outside of the battery space, Meta Materials has "multiple shots on goal." The Nova Scotia, Canada-based company has technologies applicable to many different end markets, such as holography, lithography, wireless sensing, precision integration, nano-optics, and electro-optical/infrared systems. This is reflected in its number of issued patents, a total of 292 in 112 patent categories, including 40 in the U.S. Another 60 patents are pending.
"Commercialization success in any of these verticals has the potential to drive significant value for the company," Sekelsky wrote.
The analyst wrote that he saw firsthand Meta Materials' numerous potential revenue-generating opportunities, during a visit to the company's California facility earlier this month.
Another non-battery revenue stream, for example, is from the innovative security feature for bank notes Meta is now developing with the central bank of an unnamed G-10 country. This partnership agreement is valued at up to US$41.5 million ($41.5M) over five or fewer years. Already Meta has gotten US$13.5M worth of orders for the technology and is expected to garner more this year.
"We support management's capex-light approach by aiming to partner with original equipment manufacturers as a technology provider to improve existing and future product lines," wrote Sekelsky.
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Disclosures For Alliance Global Partners, Meta Materials Inc., February 17, 2023
"Firm" used in the this section of the report entitled "Disclosures" refers to A.G.P. / Alliance Global Partners or Euro Pacific Capital, a division of A.G.P. / Alliance Global Partners. The Firm expects to receive or intends to seek compensation for investment banking services from all companies under research coverage within the next three months.
The Firm or its officers, employees or affiliates, other than the research analyst authoring this report and his/her supervisor, may execute transactions in securities mentioned in this report that may not be consistent with the report’s conclusions. Sources referenced in this report: The information and statistics in this report have been obtained from sources we believe are reliable but we do not warrant their accurance or completeness.
Acted as Placement Agent Disclosure - The Firm or its affiliates served as placement agent in a financing to raise capital for Meta Materials within the last 12 months. As such, the Firm or its affiliates have received compensation for these "investment banking services" in the last twelve months.
Regulation Analyst Certification ("Reg AC") — The views expressed in this report (which include the actual rating assigned to the company as well as the analytical substance and tone of the report) accurately reflect the personal views of the analyst(s) covering the subject securities. An analyst's sector is the universe of companies for which the analyst provides research coverage. Accordingly, the rating assigned to a particular stock represents solely the analyst's view of how that stock will perform over the next 12 months relative to the analyst's sector average.
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• The analyst or member of the analyst's household does not have a financial interest in the company that is the subject of this report, including a position in the debt or equity of the company, without limitation, whether it consists of any option, right, warrant, future, long or short position.
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