ORGN - Origin Materials sinks 72% in two days as project faces lower profit higher capex

2023-08-11 14:47:15 ET

Origin Materials ( NASDAQ: ORGN ) -16.5% in Friday's trading and down 72% in the two days after announcing it is delaying the timeline and raising the costs for the completion of its second commercial plant.

Bank of America downgraded the stock to Neutral from Buy with a $2 price target, "as we balance our constructive view of end-market demand and the company's technology with the sharp rise in funding risks and significantly deferred profitability expectations," according to BofA's Steve Byrne.

Origin ( ORGN ) has essentially tripled capex per unit of the Origin 2 plant and now expects reduced profits, so Byrne slashed his forecast for FY 2032 EBITDA to ~$300M from $500M-plus by 2030 previously.

With estimated external funding needs of ~$2.15B for Origin 2 and 3, Byrne said leverage leverage metrics now look very elevated, casting significant doubt on non-dilutive funding.

More on Origin Materials:

• Financial and valuation comparison to sector peers
• Analysis: Origin Materials: A Future Leader In Producing Cheap, Carbon-Negative Materials
• Stock price return: Down 68.5% YTD, down 79% in the past 12 months

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