Alexium's $1.10 Price Target Maintained by Sydney Broker

SYDNEY, AUSTRALIA--(Marketwired - Aug 3, 2015) - "Alexium continues to be the subject of a BUY recommendation from a Sydney-based stockbroker with a price target of $1.10."

Alexium International Group (ASX: AJX) (AX: AJX) (OTCQX: AXXIY) remains a conviction pick of Sydney firm Foster Stockbroking, which has a BUY recommendation with a price target of $1.10 per share.

The broker noted that a recent site visit to the company's U.S. operations confirmed it was on track in 2015 to deliver commercialisation targets in just the first year of sales.

Shares in AJX last traded at $0.695. The following is an extract from its commentary.

Sales Pipeline experienced rapid growth in Q2

Over 40 customers now active across various stages of proposal, sample tests, production scale up and final contract.

While we do not expect all 40 customers to sign, the growth in customers coming from inbound calls, networking, trade shows etc has materially grown from our reported 10-15 customers when we initiated.

Customers for AJX will appear along the textile supply chain that includes: the Brand owner, Cut & Sewers, Textile Finishers and Fabric Mills/Weavers.

The company estimates the immediate US market opportunity it has sized as suitable for the current FR textile products: Outdoor U$50 million; Automotive U$100 million; Home Furnishings U$100-200 million and Defense U$240 million.

This excludes other growth markets and markets outside of the U.S.

Management have indicated there are at least 1-2 customers across each of the key sectors progressing to a decision in 2015 that can deliver U$5-10 million revenue per contract potential.

Together with smaller contract wins, only 50% conversion of these opportunities could underwrite our CY16 revenue forecast of $50 million.

EBITDA margins are healthy in the range of 30-50%.

Q3 on track to confirm a material home furnishing client

What could be the next major stock catalyst is news confirming the conversion of production scale up has now transferred to contracted revenue in the home furnishing sector.

As flagged to the market, this opportunity will start with monthly revenues in the U$200,000-300,000 range. This contract alone would underwrite the annual burn-rate of the company.

Should volume orders exceed this level in Q4, this deal will demonstrate potential to scale to U$5-10 million annualized sales.