BioLargo Inc. (BLGO:OTCQB) should benefit from the Environmental Protection Agency's (EPA's) new national requirement that public drinking water contain nearly undetectable levels of six per- and polyfluoroalkyl substances (PFAS), reported Oak Ridge Financial analyst Richard Ryan in an April 17 research note.
The cleantech firm has a technology, its aqueous electrostatic concentrator (AEC), that removes PFOA and PFOS chemicals from water and creates little waste in the process. AEC can be used to meet the EPA's new maximum contaminant level requirements.
"The recent EPA regulations should help drive investor attention to BioLargo's unique technology offering," Ryan wrote.
Target Raised, Buy Reiterated
The analyst also reported that Oak Ridge increased its bull target price on BioLargo to US$0.50 per share from US$0.45 due to higher comp valuations. The base target price is US$0.38. Now, the California-based environmental solutions firm is trading at about US$0.38 per share, matching the base target price.
The difference between BioLargo's current and bull target prices implies a potential return for investors of 32%.
The company remains a Buy.
What Must Be Done
The EPA's safe drinking water rule supersedes any and all state and local drinking water regulations; all jurisdictions must adhere to this federal regulation. It mandates that water utilities monitor PFAS or forever chemicals. If these are found to be present in the public water at levels that exceed the new caps, the utilities must alert the public and decrease the contamination.
The timeline for compliance with the new regulation is as follows: Within three years of the rule's April 2024 passage date, utilities must complete initial monitoring. Within the subsequent three years, between 2027 and 2029, they must include the results of initial monitoring in consumer confidence reports and must begin regular monitoring for compliance. Utilities must be in full compliance by 2029.
Market Opportunity
According to EPA estimates, about 6–10% of the nation's 66,000 public drinking water systems subject to the new rule will have to take action to comply. The collective cost to do so will be about US$1.5 billion annually. Funding is available funding for this purpose, including monies provided via the Bipartisan Infrastructure Law.
"The large emerging market for PFAS removal and BioLargo's growing validation in this opportunity should not be overlooked," Ryan wrote.
BioLargo's Solution
AEC is in the early stage of adoption and needs scale to significantly impact BioLargo's bottom line, Ryan pointed out. The company has one project underway for a municipality for which it is slated to install its AEC technology later this year. Management also is working to grow this line of business.
"BioLargo is developing selling and channel partners with known global entities," added Ryan. The pipeline of opportunities is large and growing."
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Important Disclosures:
- BioLargo Inc. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of BioLargo Inc.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
- This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.
- This article does not constitute medical advice. Officers, employees and contributors to Streetwise Reports are not licensed medical professionals. Readers should always contact their healthcare professionals for medical advice.
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Disclosures for Oak Ridge Financial, BioLargo Inc., April 17, 2024
Analyst Certification: I, Richard Ryan, certify that the views expressed in this research report accurately reflect my personal views about the subject company and its securities. I also certify that I have not been, am not, and will not be receiving direct or indirect compensation related to the specific recommendations expressed in this report.
Important Disclosures: The analyst or a member of his/her household does not hold a long or short position, options, warrants, rights or futures of this security in their personal account(s). As of the end of the month preceding the date of publication of this report, Oak Ridge Financial did not beneficially own 1% or more of any class of common equity securities of the subject company. There is not any actual material conflict of interest that either the analyst or Oak Ridge Financial is aware of. The analyst has not received any compensation for any investment banking business with this company in the past twelve months and does not expect to receive any in the next three months. Oak Ridge Financial has been engaged for investment banking or advisory services with the subject company during the past twelve months and does anticipate receiving compensation for such services in the next three months. Oak Ridge Financial has not served as a broker, either as agent or principal, buying back stock for the subject company’s account as part of the company’s authorized stock buy-back program in the last twelve months. No director, officer or employee of Oak Ridge Financial serves as a director, officer or advisory board member to the subject company
Oak Ridge Financial does not make a market in the subject security at the date of publication of this report.
Other Disclosures: The information contained in this report is based on sources considered to be reliable, but not guaranteed to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. This report has been prepared solely for informative purposes and is not a solicitation or an offer to buy or sell any security. The securities described may not be qualified for purchase in all jurisdictions. Because of individual requirements, advice regarding securities mentioned in this report should not be construed as suitable for all accounts. This report does not take into account the investment objectives, financial situation and needs of any particular client of Oak Ridge Financial. Some securities mentioned herein relate to small speculative companies that may not be suitable for some accounts. Oak Ridge Financial suggests that prior to acting on any of the recommendations herein, the recipient should consider whether such a recommendation is appropriate given their investment objectives and current financial circumstances. Past performance does not guarantee future results. Additional information is available upon request.
