•  Catalysts: Massive insider buying on the open market after KODK unveils new EV battery business
• Sentiment: Likely to improve soon - won't be seen as just a legacy camera company
• Fundamentals improve across the board in recent earnings report 
• Technical analysis from Rex Man: ​​Stock could go parabolic beyond the 9s

Don’t let the name Kodak fool you. This isn’t your father’s go-to film and camera company anymore. Eastman Kodak Co. (KODK) said on its most recent earnings call that it is exploring several new opportunities including in EV batteries, light-blocking technology, transparent antennas, and reagent manufacturing.  

Of these initiatives, EV batteries are the most exciting and maybe the most obvious reason for the spate of recent insider buying. 

Our StoryTrading community has been following KODK closely to understand why it may be time to take a serious look at the company, and our founder Ben Rabizadeh, recently provided an update to Benzinga through the lens of our four pillars: Fundamentals, Catalysts, Sentiment, and Technicals.

Overview

KODK was founded in 1892 by George Eastman and Henry Strong, serving as the dominant provider of photographic film for most of the 20th century. That all changed with the digitization of cameras, which led to KODK filing for Chapter 11 bankruptcy protection in 2012. 

The company eventually emerged from bankruptcy after selling a number of its patents and rebranding itself as a global technology company focused on print and advanced materials and chemicals. 

But the next generation of the company’s business model has never really come into focus since the demise of photographic film. That is, perhaps, until now.

Fundamentals

Most of the company’s revenues, which totaled $1.1 billion in 2021, still come from traditional printing, followed by digital printing and advanced materials and chemicals. That being said, revenues for advanced materials and chemicals rose 23 percent to $212 million in 2021 from $172 million in 2021. This is the same segment responsible for the company’s new initiative in the EV/Energy space.  

Looking at net income, the company swung to a profit of $24 million in 2021, compared with a loss of $541 million in 2020. Cash is also holding strong on the balance sheet with $362 million reported as of December 31, 2021, versus $196 million as of December 31, 2020.

Catalysts

There has been a significant amount of stock purchases of late by insiders. Kennedy Lewis Management, which is tied to KODK Director Darren Richman, purchased approximately 2.7 million shares following the company’s fourth-quarter results on March 15.

Days following this insider buying, it was revealed in a filing that KLM’s stake increased by another several million shares to 6.3 million shares or a 7.8% stake. Clearly, this insider has significant conviction that KODK will perform well in the future.

It’s noteworthy that another director, Michael Sileck, has also been buying shares on the open market.

During the company’s fourth-quarter call, Executive Chairman and CEO Jim Continenza discussed new initiatives in KODK’s advance materials and chemicals business. Especially, the “coating of substrates is a critical aspect of manufacturing materials for batteries and Kodak plans to capitalize on its expertise in coating technology to develop opportunities in this area,” as noted in the company’s deck that accompanied its fourth-quarter earnings results. 

The company also said that “over the past several years, Kodak has been using its pilot coating facility to work with battery developers to coat their materials on substrates for EV/energy storage batteries and fuel cells. Based on potential commercial opportunities, we are assessing full-scale production feasibility.”

It’s significant that the company is talking about “production” already in its first-ever public release about this program after several years of a pilot program. Combined with the massive insider buying days after this revelation, one could speculate that the insiders are purchasing stock because they have high confidence this business is about to go into high-volume production and become a meaningful growth opportunity for the company.

Recent job openings at KODK serve as additional evidence that high-volume production may be right around the corner.

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However, the insider buying may not be due just to momentum in the EV battery space. The following updates were also provided:

• Light Blocking Technology – Kodak plans to leverage a proprietary technology initially developed for electrophotographic toners to commercialize a carbon-less fabric coating designed to offer superior light management, from complete blackout to selective light filtering, and coating compatibility with an unmatched range of fabrics. • Kodak has successfully developed and tested a product branded KODALUX for blinds and drapery coating applications. There has been significant interest in the KODALUX product from major hospitality businesses. • Kodak is completing the installation and commissioning of its proprietary fabric coating plant in Eastman Business Park, located in Rochester, NY. Kodak expects the coating facility to come online and start supplying product in the second half of 2022.

• Transparent Antennas - Kodak plans to leverage its proprietary copper micro-wire technologies and high-resolution printing expertise to contract-manufacture custom transparent antennas for automotive, commercial construction, and other applications requiring excellent RF (radio frequency) and optical performance. • Kodak is working with multiple customers in several market segments at different stages of the commercialization process for antenna products. • Kodak is making a modest investment in manufacturing infrastructure in 2022 to meet the needs of RF antenna customers.

• Reagent Manufacturing – Kodak plans to capitalize on its existing chemical manufacturing expertise to implement an expansion into manufacturing Diagnostic Test Reagent solutions.  Kodak is in the early stages of developing a test reagent manufacturing facility for producing reagents used in laboratory tests. Renovation to convert an existing clean room to a cGMP facility is underway.  Kodak’s initial objective is to enter the domestic Balanced Buffer market due to the domestic supply chain crisis and regulatory requirements. Once the Kodak cGMP facility is operational, Kodak plans to manufacture limited volumes of a variety of regulated chemicals and materials for healthcare applications.

With all of these newly revealed businesses cooking, it's no wonder insiders have made such a massive recent bet. 

Sentiment

Investor sentiment has been negative for this company due to its legacy camera business, which investors are not excited about. However, it’s a small leap to speculate that investors will soon change their sentiment as the company enters the EV battery space. This is not just a camera company anymore.

This improved sentiment could be a tailwind for improved valuations.

Technicals

StoryTrading consults with technical expert Rex Man to identify resistance levels and bull targets. Following is his recent chart and analysis on KODK.

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Rex Man noted that KODK “can go parabolic beyond the 9s.” You can find more from Rex Man on Twitter.

Summary 

The StoryTrading community empowers individuals to make the best-informed trade and investment decisions through a holistic view of stocks based on the four pillars of Fundamentals, Catalysts, Sentiment, and Technicals. Analyzing all four pillars together can also help identify key inflection points.

Recent catalysts for KODK paint a compelling picture, coupled with solid fundamentals, improving sentiment, and technicals moving in the right direction.

The question is whether KODK’s focus on the EV battery space will cause a rapid re-rating in the stock. That's for you and the rest of the market to determine. We'll be here to tell the story as events develop!