YB new stock pitches (Wed, Apr 23)

Lifecore Biomedical (LFCR) is an undervalued specialty CDMO (80% of revenue) and hyaluronic acid producer (20%) trading at 38x NTM EBITDA, currently overleveraged at >5x EBITDA. The company's undervaluation stems from its past as an unfocused conglomerate with financial misstatements, a failed sale process, and high leverage. LFCR's five-head isolator filler is operating at only 20% utilization, with management projecting 40-60% revenue growth in 36-48 months as they capitalize on the injectable CDMO market's 10% growth rate. The company has capacity for $300M in revenue, supported by contractual minimum volume commitments, 10 late-stage programs, and over 50 business development opportunities including potential GLP-1 production contracts. As utilization increases, LFCR's EV/EBITDA multiple should compress to approximately 13x by 2028, making it significantly undervalued compared to recent CDMO transactions at 20-32x EBITDA multiples (Catalent at 31x, Biovectra at 27x, Avid Bioservices at 32.1x). With management incentivized for a sale and indicating an 80% probability of a change in control by 2028, catalysts include deleveraging, positive net income, and potential acquisition, though risks remain around drug pipeline sales, operational issues, and failure to sell the company. - link

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Tinexta (TNXT.MI) is an Italian digital services firm with three divisions: Digital Trust (largest at €207M revenue, 32% EBITDA margin), Cybersecurity (€106M, 17% margin), and Business Innovation (€152M, 29% margin). While reported growth appears strong (Digital Trust +14%, Cybersecurity +19%, Business Innovation +16%), organic growth was more modest (Digital Trust +8.3%, Cybersecurity +2.9%, Business Innovation -4.7%). Management expects 5-9% organic growth in 2025, with Cybersecurity projected to grow fastest at 20% revenue/50% EBITDA growth. The company trades at just 7.7x 2025 adjusted P/E and 6.3x 2026 P/E, well below its historical average of 15x. A sum-of-parts analysis values Digital Trust at €1.35B (7x revenue), Cybersecurity at €640M (5x revenue), and Business Innovation at €446M (3x revenue), totaling €2.44B. After applying a 35% conglomerate discount and deducting €322M of debt, the fair value is €27.50 per share (versus current €8.46), representing significant upside despite high government ownership (56%) limiting takeover potential.

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Savencia SA (SAVE.PA) is a global dairy company ranking among the top five cheese producers worldwide, with iconic brands including Caprice des Dieux, Saint Agur, Rochebaron, and Saint Albray that are staples in European households. The company has been family-controlled for nearly 70 years, maintaining stable margins that are currently recovering post-inflation. Savencia features a well-diversified sales distribution: 30% in France, 40% across Europe, and 30% in the rest of the world, with steady growth both organically and through small acquisitions like Burgo de Arias in Spain. Despite doubling in size and nearly tripling earnings since a 2018 thesis by Iván Martín of Magallanes Value Investors, the company still trades at historically low valuations, making it an attractive investment opportunity characterized by strong brands, global footprint, and insider alignment.

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