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Heliospectra – analyst report sees large upside

images-12Swedish investment bank Redeye has initiated coverage of LED lighting specialist Heliospectra. In a very bullish report, Redeye sees a fair value in their base case of SEK 13.7 (40% upside) and a fair value of SEK 28.4 (188%) in their bull case scenario. The full report can be accessed here.

Heliospectra specializes in intelligent lighting systems for plant research, greenhouse cultivation and controlled environment agriculture. The company is a global leader in LED grow lights for advanced research applications and has patented technology. With an updated product portfolio and strengthened organization, Heliospectra is well positioned to rapidly grow sales in the booming medical plant segment and the greenhouse cultivation segment. Redeye writes that they expect Heliospectra’s efforts to pay off and expect sales of SEK 55 million in 2016 and continued strong growth going forward. For 2018, they expect sales to reach 120 million and EBIT to be positive for the first time in the company’s history.

Here are some more highlights from Redeye’s report:

  • Heliospectra is in the middle of a transition from a research company with little focus on sales to a leading global player in the rapidly growing market for intelligent LED grow light solutions. With a strong position in the research market and several important contracts and partnerships in the medical plant segment and research segment we believe Heliospectra is on the verge of its big market breakthrough.
  • In 2015 several important contracts have been won. The most notable order came in the medical plant segment and was the largest order for LED grow lights from a grower of medical marijuana to date at SEK 5.7 million. We see Heliospectra as well positioned to sustain its strong position in the research segment and establish itself as a leading player in the fast growing medical plant/legal marijuana segment as well as in the commercial greenhouse segment.
  • The global market for LED grow lights is expected to grow at a CAGR above thirty percent from 2014 – 2020. The use of LED grow lights address global issues of environmental impact from agriculture and fresh food supply for the urban population.
  • LED grow lights provide short payback times on investment for growers of marijuana who can drastically reduce their high electricity costs and increase productivity and quality. Heliospectra is establishing itself as a well renowned player in the legal marijuana segment and will benefit from the ongoing legalization movement in the US as well as in other countries.
  • Heliospectra is in the final stages of the development of a biofeedback system allowing autonomous plant growth. The system incorporating LED grow lights, proprietary software and sensors is patented and it will be hard for competitors to offer growers the same benefits.

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