We are initiating coverage of Starco Brands, Inc. ("Starco" or the "Company"), an emerging owner and marketer of branded consumer goods, with a Buy rating and price target of $0.25, or 26X our December 2024 Adjusted EBITDA. Starco's stable of brands includes: 1) Art of Sport body and skincare products, 2) Skylar hypoallergenic fragrance and beauty products; 3) Soylent plant-based food products, 4) Whipshots vodka infused whipped cream aerosols and 5) Winona butter flavored popcorn spray. Leveraging their relationship with leading aerosol and liquid fill manufacturer The Starco Group, a shared services platform and management's deep expertise, Starco has been able to rapidly register strong EBITDA margins (10.7% for the first nine months of 2023). Further, as the company continues to expand their offerings, increase penetration with leading retailers, drive higher consumer awareness, and leverage their operating infrastructure, we believe there are opportunities for material organic revenue growth and further acquisitions. As such, we view STCB as a rapidly growing owner of highly differentiated brands, with the business model to register consistent and strong overall top and EBITDA returns and are initiating coverage of STCB with a Buy rating and $0.25 price target.
