ENZY : NASDAQ : US$17.81
BUY
Target: US$24.00
COMPANY DESCRIPTION:
Enzymotec develops and manufactures lipid based nutritional ingredients and medical foods. These nutritional ingredients are
designed for dietary supplementation, while its medical foods help address conditions such as cardiovascular health, ADHD and
cognitive impairment. Specific products include Omega 3 rich krill oil, phosphatidylserine (PS), InFat , a proprietary infant nutrition ingredient, and a portfolio of branded medical foods.
All amounts in US$ unless otherwise noted.
Consumer & Retail — Health, Wellness and Lifestyle
ENHANCING LIPID NUTRITION THROUGHOUT THE LIFE-CYCLE;
INITIATING WITH A BUY RATING AND $24 PRICE TARGET
Investment recommendation
We believe Enzymotec is well positioned to drive sustained growth in the highly attractive nutrition market, translating into strong sales, margin and earnings momentum. Its Vaya segment is purely an incremental opportunity not yet factored into the valuation.
Investment highlights
Initiating coverage with a BUY rating and $24 price target, reflecting our belief in the growing role of lipids as highly
efficacious nutritional ingredients with broadening application.
We believe Enzymotec is a 20%+ revenue grower longer term (currently faster), with emerging leverage resulting in earnings
growth well above this rate.
Vaya Pharma offers incremental opportunity in the emerging area of medical foods, complemented with Rx optionality as a
nice “call option” at current levels.
Valuation
Shares currently trade at 27x C2014E EPS and 18x corresponding EBITDA. Our $24 price target is derived as 22x our C2015 EPS
forecast, plus 2.5x our F14 Vaya sales forecast of $15M.
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