Roth/MKM sets $10 target for Cadiz stock, initiates with Buy

On Thursday, Roth/MKM began coverage on shares of Cadiz Inc (NASDAQ:CDZI) with a Buy rating and a price target of $10.00. The firm’s analysts highlighted the strategic positioning of Cadiz’s Mojave Ground Water Bank & Supply system, which is set to play a crucial role in addressing Southern California’s escalating water supply challenges.

The project, which has completed the majority of its permitting process, is recognized for its potential to generate multiple streams of cash flow. The analysts estimate that the project could yield a net present value (NPV) of cash flows amounting to $1,006.9 million, translating to $10 per share. Investors should note that InvestingPro analysis indicates the stock typically trades with high volatility, with the price ranging from $2.13 to $5.68 over the past 52 weeks.

The Public Private Partnership (PPP) model adopted by Cadiz is anticipated to offer an asset-light approach, reducing the company’s infrastructure investment costs. This structure is aimed at enhancing the financial viability of the water supply project.

The initiation of the coverage by Roth/MKM comes at a time when water scarcity issues are increasingly becoming a concern for regions like Southern California. Cadiz’s project is therefore seen as a timely intervention in the water supply sector.

Cadiz Inc’s stock performance will be monitored closely by investors as the company progresses with its Mojave Ground Water Bank & Supply system and taps into the identified cash flow generation levers. The company’s pursuit of an asset-light strategy through its PPP model is also expected to contribute to its financial efficiency and overall growth.

In other recent news, Cadiz Inc. has declared a cash dividend for its Series A Cumulative Perpetual Preferred Stock, amounting to $550.00 per whole share. This dividend will be distributed to shareholders on April 15, 2025, with holders of depositary shares receiving $0.55 per share. Additionally, Cadiz Inc. has secured a significant investment of up to $175 million through a Letter of Agreement with a publicly traded company specializing in water infrastructure investments. This investment is directed towards the development of the Mojave Groundwater Storage Company, LLC, which will manage the Mojave Groundwater Bank project. The project aims to secure a total equity capital of up to $401 million from various investors, including Native American Tribes. Cadiz will contribute assets such as the Northern Pipeline and 51% of water storage rights to the project. In return, Cadiz is set to receive approximately $51 million, with an additional $350 million allocated for project development. The completion of this transaction is contingent upon definitive agreements and shareholder approval.

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