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Analyst Actions: Raymond James Initiates Coverage of Legumex with Outperform Rating, $7.25 Target Price

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Special Crop Foundation, Specialty Oil Growth Engine: "Legumex has rapidly emerged as one of the world's leading providers of pulse and special crops with a discernible growth focus on premium, niche verticals such as beans, flax, sunflower seeds, and canary seed. At the same time, the company is in the final stages of commissioning its $120 million Pacific Coast Canola plant in central Washington, positioning the firm to capitalize on North America's premium, expeller-pressed canola oil market, a transition that we believe will double the company's earnings power."

Fundamentals Tilting Favourably; Goldilocks Supply Scenario Emerging: "Global pulse and special crop fundamentals are tilting favourably, in our view, underpinned by a series of production trends that point toward a sharp tightening in the supply-demand balance, an evolution that we believe will increasingly benefit Legumex's baseline 'Special Crop' unit. These include: (i) stagnant-to-declining production in key originating/ importing regions, most notably Turkey, India, and Argentina; and (ii) a 'Goldilocks' supply setup in North America (i.e. not too hot, not too cold!), where robust international exports coupled with modest production declines are expected to firm up industry sentiment and reintroduce pricing power."

Bedrock Value; Compelling Entry Point: "Legumex shares are currently trading at ~64% of tangible book ($5.99/share) owing to what we believe are a series of transient headwinds, thereby presenting value-orientated investors with a compelling entry point, in our view."

Valuation: "Our $7.25 target price is based upon a 7.7x multiple to our 2015 EBITDA estimate, with the output discounted back one year at 20%. Our target price is equivalent to just 1.1x Legumex's current book value."

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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