OT OTLY Oatly Group AB American Depositary Shares Loading... : Investor Sentiment and Bull/Bear Views

Duncan is a current Oatly holder and calls it his favorite stock; the position was down sharply as diesel and freight costs hurt the company even though it had revenue growth, and he is still exposed to the loss.

Author argues Oatly has been turned around under CEO Flatin, with gross margin more than tripling, revenue up ~20% FY22-FY25, positive adjusted EBITDA, and raised FY guidance to 8-10% growth driven by volume. Catalysts are a potential Greater China carve-out (~$200M) to pay down high-interest convertible debt, expected to complete by year-end, and North American launches of Matcha, Coconut, Churros and Popcorn flavors in Q3/Q4. Author's DCF yields a $22 fair value versus ~$12 price, with FCF positive by FY27. Main risks are ~$475M net debt including $330M of 9.25% convertibles due 2028, execution risk on the growth playbook, and possible dilution.

Oatly holds two patents on recovering fiber from its processing waste and has already commercialized a 7.5g-fiber-per-serving product in China. The author expects fiber-enhanced drinks to be added to the US and European portfolio soon, which could become the company's next growth cycle. Oatly is already profitable as of last quarter, and the rising consumer focus on fiber (digestion, immunity, inflammation, weight management) opens a large opportunity for shareholders.