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On Wednesday, Lifecore Biomedical (NASDAQ:LFCR), a $245 million market cap company, received an Outperform rating as William Blair initiated coverage on the company’s shares. The firm’s assessment hinges on the solid foundation provided by Lifecore’s minimum volume commitments from its top customer, Alcon (NYSE:ALC). These commitments are expected to significantly contribute to the company’s revenue growth over the next few years. According to InvestingPro data, the company maintains strong liquidity with a current ratio of 2.71, though it faces near-term profitability challenges.
In his report, the William Blair analyst outlined a positive outlook for Lifecore Biomedical, projecting a compound annual revenue growth rate of 11.6% from fiscal 2025’s $128.0 million to $178.0 million by fiscal 2028. This growth trajectory aligns with Lifecore’s own midterm revenue guidance and builds upon its recent revenue growth of 7.23%. InvestingPro analysis reveals additional insights about the company’s financial health and growth prospects, with over 30 key metrics available to subscribers.
A key factor in this growth is the $20.0 million anticipated to come from fill/finish minimum volume commitments from Alcon. These commitments are safeguarded by take-or-pay agreements, ensuring a steady revenue stream for Lifecore. The analyst’s comments reflect confidence in the company’s ability to meet its midterm revenue targets, bolstered by these contractual agreements with Alcon.
The total incremental revenue expected over the period is estimated to be $50.0 million, with nearly half of this amount underpinned by Alcon’s commitments. This provides a clear path for revenue expansion, as Lifecore continues to capitalize on its relationship with its major customer.
Lifecore Biomedical’s stock performance will be one to watch as the company works towards fulfilling its outlined revenue goals. The endorsement from William Blair suggests that Lifecore is positioned well for future growth, with a solid base of guaranteed income from Alcon’s fill/finish services. With a gross profit margin of 33.45% and trading near its InvestingPro Fair Value, investors seeking deeper insights can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, which provides detailed analysis of the company’s growth prospects and financial health.
In other recent news, Lifecore Biomedical reported a slight decline in revenue for its fiscal third quarter of 2025, with a 2% decrease from the previous year, reaching $35.2 million. The company experienced a net loss of $14.8 million, translating to a loss of $0.47 per diluted share. Despite these challenges, Lifecore Biomedical remains cautiously optimistic about future revenue growth and improved cash flow. The company has set a revenue guidance range of $126.5 million to $130 million for the full fiscal year, with expectations for adjusted EBITDA to fall between $19 million and $21 million. In another development, Lifecore Biomedical secured stockholder approval to issue shares exceeding 19.99% of its common stock, allowing the conversion of Series A Convertible Preferred Stock into common stock. This approval was part of a Special Meeting of Stockholders, aligning with Nasdaq Listing Rule 5635(d). Additionally, Lifecore Biomedical continues to expand its customer base, having added six new customers and advancing ten late-stage pipeline programs. These developments highlight the company’s strategic focus on growth and operational efficiency.
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