Gauging Marrone Bio’s Risk Factors

Marrone Bio Innovations, Inc. (MBII) provides sustainable pest-management and plant-health solutions, with a portfolio of 15 products.

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The company’s Q2 numbers, released on August 16, fell short of consensus on both top-line and bottom-line fronts. Let’s take a look at MBII’s financial performance as well as what has changed in its key risk factors that savvy investors should be aware of. (See Marrone Bio stock charts on TipRanks)

Marrone Bio’s Q2 revenue increased 3.3% over the previous year to $12.6 million, but lagged consensus by $2.8 million. Marrone saw a constrained growth in specialty and row-crop products in the quarter. This was due to issues in the supply chain, along with a severe drought in the Western U.S.

Owing to an expansion in gross margin and better cost containment, adjusted EBITDA improved by 51%, to a loss of $0.7 million in Q2. Its net loss per share of $0.02 missed estimates by $0.01.

Marrone Bio CEO Kevin Helash said, “Despite external short-term headwinds, we grew revenues and made significant improvements across our key metrics — particularly adjusted EBITDA — in the first half of the year.

“We expect to return to a more normalized revenue growth rate in the second half of the year, while carefully managing discretionary spending to ensure we continue our progress toward delivering adjusted EBITDA breakeven in the near-term.”

For Fiscal Year 2021, Marrone Bio estimates revenue growth in the mid-teens and annual gross margins in the range of the upper fifties.

On August 18, H.C. Wainwright analyst Amit Dayal reiterated a Buy rating on the stock with a price target of $4. Dayal commented, “We believe the company remains ahead of the competition with respect to commercializing organic pest management and yield improvement solutions for the agricultural industry, with the market continuing to move in its direction.”

The other analyst covering the stock, Lake Street’s Ben Klieve also has a Buy rating on Marrone Bio, with a price target of $2.50.

The two ratings add up to a Moderate Buy consensus rating. The average Marrone Bio price target of $3.25 implies 218.6% potential upside for the stock. Shares are down 21% year-to-date.

Now, let’s have a look at what’s changed in the company’s key risk factors profile.

According to the new Tipranks Risk Factors tool, Marrone Bio’s main risk categories are Finance & Corporate, and Production, accounting for 31% and 19% respectively, of the total 32 risks identified. Since June, the company has added one key risk factor.

Under the Production risk category, Marrone Bio highlighted that in the present scenario of COVID-19 and pressure on global supply chains, factors such as higher input costs, supply chain disruption, lower availability of raw materials, and lower manufacturing capacity could harm the company’s business.

The sector average Production risk factor is 20%.