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Monday - Analysts at Maxim Group have adjusted their price target on shares of Graphex Group (NYSE:GRFX), a company specializing in graphene production, to $0.40 from the previous target of $2.50. Despite the significant reduction, the firm maintains a Buy rating on the stock.
On Monday, Maxim Group cited a need to revise estimates due to lower product pricing and a delay in the commencement of U.S. production operations for Graphex. The company, known for its proprietary technology in producing graphene battery materials from graphite, has a portfolio of 23 patents. These patents encompass machinery design, the production of spherical graphite, and environmental protection measures.
Graphex reported a cash position of $1.3 million and a debt load of $27.8 million as of June 30, 2024, after experiencing a cash burn of $2.6 million in the first half of 2024. The analyst anticipates that Graphex will seek additional capital in the second half of 2024 to support its ongoing operations.
Despite the lowered stock price target, Maxim Group's analyst highlighted the company's solid EBITDA margin of 12% in the first half of 2024, which supports Graphex's expansion plans into the U.S. market. The new price target of $0.40 is based on 0.7 times the firm's estimated book value per share of $0.58 as of June 30, 2025. The current trading value of Graphex is at 0.2 times its book value per share of $0.87 as of June 30, 2024.
InvestingPro Insights
As Graphex Group (NYSE:GRFX) navigates through a challenging phase with downward adjustments to its price target, InvestingPro data provides a more granular view of the company's financial health. With a market capitalization of only $8.49 million, the company is trading at a low Price / Book multiple of 0.21, which may signal a potential undervaluation relative to its book value. This aligns with Maxim Group's analysis that the stock is trading below its estimated book value per share.
However, the financials reveal a company under pressure, with revenue in the last twelve months as of Q2 2024 down by nearly 29%. This contraction in revenue is also reflected in a quarterly decline of over 38%. Moreover, the company's short-term obligations surpassing its liquid assets is a signal of potential liquidity risks, which might explain the need for additional capital as anticipated by analysts.
InvestingPro Tips highlight that analysts do not expect Graphex to be profitable this year, and the company has not been profitable over the last twelve months. This is consistent with Maxim Group's observation of the company's cash burn and the need for further capital infusion. Investors should also note that Graphex does not pay a dividend, which could be a consideration for those seeking income-generating investments.
For those interested in a deeper dive into Graphex Group's performance and prospects, additional InvestingPro Tips are available, offering comprehensive analysis and forecasts. Visit https://www.investing.com/pro/GRFX for a total of 11 detailed InvestingPro Tips that could further inform investment decisions.
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