Origin Materials, Inc. (NASDAQ:ORGN) shares are surging today. The company reported second-quarter financial results on Wednesday.

The company reported a loss per share of $0.14, missing the consensus loss of $0.12, and sales of $7.03 million came below the street view of $7.78 million.

The company has also secured a 2-year MOU for PET closure production, projected to generate over $100 million in revenue, starting in early 2025 and increasing significantly in 2026.

BofA Securities analyst Steve Byrne upgraded the company to Buy from Neutral rating and raised the price target to $3.00 from $1.35.

The analyst writes that while they maintain a positive outlook on Origin’s biomass conversion technology, the ramp-up in Polyethylene terephthalate (PET) closures has advanced EBITDA breakeven estimate to 2027 from 2029.

Additionally, there is potential for profitability as early as 2026 due to ongoing discussions for further contracts and licenses, adds the analyst.

Also, Byrne sees significant long-term potential in ORGN’s technology to convert cellulosic materials into Chloromethyl furfural (CMF, a furan-based chemical) and Hydrothermal carbon (HTC, a carbon-intensive product).

While this process takes time, CMF can produce functionally superior products, like polyethylene furanoate (PEF), with potentially higher margins and lower capex compared to traditional methods, writes the analyst.

The analyst projects $10 million in licensing income in 2027, increasing to $20 million in 2028.

Price Action: ORGN shares are up 26.4% at $1.39 at the last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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