SeeThruEquity Initiates Coverage on Lightbridge Corporation with a Price Target of $2.10
October 6, 2015 9:00am
New York, NY (Accesswire)--SeeThruEquity, a leading independent equity research and corporate access firm focused on smallcap and microcap public companies, today announced it recently initiated coverage of Lightbridge Corporation (NASDAQ: LTBR) with a Price Target of $2.10.
The report is available here: LTBR Initiation Report. SeeThruEquity is an approved equity research contributor on Thomson First Call, Capital IQ, FactSet, and Zack's. The report will be available on these platforms. The firm also contributes its estimates to Thomson Estimates, the leading estimates platform on Wall Street.
Based in McLean, Virginia, Lightbridge has developed a proprietary metallic nuclear fuel technology, which offers increased electricity generation, better economics and improved safety benefits versus existing nuclear fuels in existing and new reactors. Lightbridge has experienced increasing success in pre-commercialization activities during 2015, including attracting the growing interest of major entities in the nuclear power sector in the US and abroad. Indeed, in May, the Nuclear Utility Fuel Advisory Board (NUFAB), which is comprised of several leading North American utilities that account for approximately 50% of US nuclear power production, publicly expressed interest in Lightbridge's technology - formally requesting the Nuclear Regulatory Commission (NRC) to prepare to review its metallic fuel design in advance of a 2017 application to use it as fuel in a US commercial reactor as early as 2020. We see several opportunities ahead for the company as it pursues commercial development of its proprietary metallic nuclear fuel technology with large nuclear fuel fabricators around the world.
"The company's patented, proprietary metallic nuclear fuel technology is designed to be compatible with existing reactors as well as new reactor technologies, which enables the technology to be used for new builds as well as the process of uprating electricity generation at existing facilities. The technology appears to have transformative potential for the $25Bn global market for nuclear fuel," stated Ajay Tandon, CEO of SeeThruEquity. "We are initiating coverage with a 12-month price target of $2.10 per share."
Additional highlights from the report are as follows:
Differentiated technology for metallic nuclear fuel
Supported by significant investments in time and research and development, Lightbridge has developed a highly differentiated technology for the design and production of metallic nuclear fuel. The company's patented, proprietary metallic nuclear fuel technology is designed to be compatible with existing reactors as well as new reactor technologies, which enables the technology to be used for new builds as well as the process of uprating the production potential of existing facilities. Lightbridge's technology appears to have transformative potential for the $25Bn global market for nuclear fuel, with independently verified benefits for utility company customers including: 10% to 30% more power, lower average fuel operating temperatures - resulting in significant safety benefits - and lower cost per megawatt hour, all of which serve to significantly improve the competitive position of nuclear energy versus fossil fuel-based and alternative energy sources.
High margin approach to a large market opportunity
We are attracted to Lightbridge's planned license-based go-to-market strategy, which offers the potential for high gross margins and powerful earnings leverage. The company has invested substantially in developing patented, differentiated metallic nuclear fuel, and intends to partner with large nuclear fuel fabricators throughout the world to market the technology to utilities in exchange for license fees and annual royalty rates that management estimates at 8% of incremental gross revenues generated by the company's technology. Impressively, Lightbridge has articulated a goal of generating annual revenue levels on the scale of $150mn-200mn if it can capture 25% of the US market alone. While this appears to be a bold goal, we note that the company has received public interest from four leading utilities representing 50% of nuclear energy produced in the United States annually, and has several pre-commercial international opportunities including Canada, Vietnam and a long history of nuclear consulting services in the Middle East. We expect the company will begin licensing activities in 2017E with planned commercial use of the company's metallic nuclear fuel as soon as 2020E. In our view, a key potential catalyst for accelerated partner discussions would be the planned completion of full irradiation testing of Lightbridge's nuclear fuel under prototypical PWR conditions in a pressurized water loop of Norway's 25 MW Halden research reactor, which, assuming favorable results could improve the company's negotiating position dramatically.
Initiate coverage with a price target of $2.10
Our analysis indicates a fair value estimate of $2.10 per share for Lightbridge. With 18.1mn shares outstanding, the target suggests an enterprise value of $35.3mn, which we view as reasonable given the potential for a growing line of high margin license and royalty revenues and the company's potentially transformative technology for the $25Bn global market for nuclear fuel.
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