Apples That Don't Brown Coming to Test Markets Early Next Year (XON)

October 3, 2016 2:30 PM EDT
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Price: $26.63 -1.63%

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    4 Buy, 3 Hold, 0 Sell

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Today Okanagan Specialty Fruits, a unit of Intrexon Corporation (NYSE: XON), announced that it has successfully completed the first commercial harvest of its non-browning Arctic Golden apple variety. The company plans to sell fruit from this inaugural harvest as fresh sliced apples in test markets across North America in early 2017.

In Arctic varieties the expression of polyphenol oxidase (PPO), the enzyme involved in oxidative browning, is virtually eliminated. As a result, the apples do not brown when bruised, bitten or cut, yet will still show discoloration from bacterial or fungal infections and rot just like any other apple.

Currently 40% of apples are wasted each year, many due to superficial bruising and browning.

The Company also announced the completion of its 70,000 tree planting goal for 2016 including both Arctic Golden and Arctic Granny varieties, and currently has 300,000 and 500,000 trees under contract in North America for planting in 2017 and 2018, respectively. Cumulatively, at maturity, these trees will produce over 30 million pounds of Arctic apples on an annual basis.

Griffen Securities analyst Keith Markey expect Okanagan’s revenue contribution to Intrexon to grow exponentially over the next five years.

"We believe the Arctic apple family will expand in the near future with an FDA approval of the Arctic Gala," Markey said. "Then, too, Okanagan's technology may be applied to pears, cherries, and other soft fruits, as well as some vegetables. Indeed, the initial research, conducted at Australia’s Commonwealth Scientific and Industrial Research Organization, centered on preventing bruising of potatoes by polyphenol oxidase."

The firm remains upbeat on Intrexon shares with a Buy rating and a target price of $55.

Shares of XON are up 3% today to $28.81.

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