Exscientia (NAS:EXAI) — mrkt cap $676mm; Price $5.11; EV/EBITDA NA
PASS. Exscientia operates in the UK, primarily as a service provider partnering with pharmaceutical companies like Bristol Myers Squibb and Sanofi to develop drugs using AI. They streamline the design and testing of compounds, speeding up drug discovery. While they’ve made commercial progress, they face significant cash burn—$100-200 million annually—and hold about $400 million in cash. A mixed shelf offering is prepared, signaling the likelihood of future issuance. Though dilution hasn’t occurred yet, liquidity concerns are likely in the near future and valuations are high at a P/S of 25x.
Consolidated Water (NAS:CWCO) — mrkt cap $385mm; Price $24.30; EV/EBITDA 7
MORE RESEARCH NEEDED. CWCO is a developer and operator of desalination and potable reuse plants. Historically, their revenue has primarily come from operations in Grand Cayman and neighboring islands, where fresh water resources and aqueduct infrastructure are limited. Recently, however, CWCO has begun shifting focus to the U.S. mainland as water scarcity emerges as an increasingly pressing political issue. While we view CWCO as one of the strongest operators in this space, its future potential remains heavily dependent on regulatory processes, adding complexity to forecasting. We will revisit the company as support for desalination and potable reuse infrastructure becomes more substantial
Laser Photonics (NAS:LASE) — mrkt cap $80mm; Price $5.27; EV/EBITDA NA
PASS. LASE manufactures fiber optic lasers for precision etching and cutting applications, competing in the same market as IPGP, a company we have previously analyzed. LASE’s stock has risen nearly 400% this year, driven by expanding defense-related opportunities, particularly in the anti-drone defense sector. Lasers effectively ‘blind’ drone sensors, rendering them inoperative. However, LASE has yet to demonstrate a product advantage over competitors, and its R&D limitations may be difficult to overcome. Moreover, lasers have yet to establish themselves as the leading anti-drone solution, with alternative technologies emerging. Given LASE’s current lack of profitability, we are opting to pass on this name.