Greenhaven Road Capital's Q2 2025 Investor Letter Highlights Lifecore Biomedical as a High-Value Stock

Greenhaven Road Capital highlights Lifecore Biomedical (LFCR) as a stock with high expected value in its Q2 2025 investor letter. The company operates as a contract drug manufacturer with significant manufacturing capacity and 15% EBITDA margins. Lifecore Biomedical's one-month return was -0.54%, and its shares gained 30.05% over the last 52 weeks. The fund returned approximately +14% net of fees and expenses in Q2.

Greenhaven Road Capital, an investment management company, has highlighted Lifecore Biomedical (NASDAQ: LFCR) in its Q2 2025 investor letter, noting the stock's potential for high expected value. The company operates as a contract drug manufacturer with significant manufacturing capacity and 15% EBITDA margins. Lifecore Biomedical's one-month return was -0.54%, and its shares gained 30.05% over the last 52 weeks. The fund returned approximately +14% net of fees and expenses in Q2 [2].

Lifecore Biomedical has been experiencing growth driven by expanding partnerships, operational enhancements, and regulatory credibility. The company's focus on injectable and HA-based drugs, along with new market entries, is broadening its addressable market and supporting sustained growth. However, the company faces challenges such as heavy reliance on key customers, margin compression, and sector risks, which could impact its profitability and growth [1].

Greenhaven Road Capital increased its stake in Lifecore Biomedical in the previous quarter, suggesting confidence in the company's prospects. The fund's positive returns and the stock's recent performance indicate that Lifecore Biomedical may be undervalued, presenting an opportunity for investors. However, the company's dependence on a few large customers and the potential for margin compression and pricing pressure in the injectable and hyaluronic acid contract manufacturing market pose risks [1].

Analysts expect Lifecore Biomedical's revenue to grow by 11.5% annually over the next three years, with profit margins converging on the US Life Sciences industry average. If these assumptions hold, the company's earnings could reach $25.4 million by 2028, with a future PE ratio of 22.4x [1].

In conclusion, while Lifecore Biomedical faces challenges, its growth prospects and potential undervaluation make it an interesting investment opportunity. Investors should carefully consider the risks and potential rewards before making a decision.

References:
[1] https://simplywall.st/community/narratives/us/pharmaceuticals-biotech/nasdaq-lfcr/lifecore-biomedical/fnodynzp-biopharma-partnerships-and-injectable-demand-will-expand-global-reach-d1j7
[2] https://finance.yahoo.com/news/does-lifecore-lfcr-high-expected-133622926.html