Hanson Westhouse has initiated coverage on Plant Health Care PLC (AIM: PHC), a provider of natural products to the agriculture and landscape industries, with a ‘buy’ rating and short term price target of 225 pence per share.
The broker said in a note the company’s core product is Harpin, which increases crop yields by enacting a plant’s natural defense response to disease. “PHC has a royalty based commercialisation agreement with Monsanto and we expect PHC to move into profitability in 2011 as Monsanto applies Harpin to its soybean seed treatment.”
However, Harpin can be applied to a wide range of other crops and HansonWesthouse expects PHC to establish additional royalty streams over the next two years. Based on its conservative longer term assumptions, it believes that the shares could be worth at least 225p.
It anticipates positive news flow over the next twelve months, the broker added.