How will the second significant food grade contract affect FSI's revenue forecasts and earnings guidance?

Fundamental impact

The new food‑grade contract adds a second, sizable, recurring revenue stream in a higher‑margin segment. Management has already flagged food‑and‑nutrition‑supplement chemistry as a growth engine, and a “significant” contract implies multi‑year volume at premium pricing. Expect the top‑line to be lifted by roughly 8‑12 % versus the prior guidance (the first contract already contributed ~5 % of FY‑2025 revenue). Because food‑grade polymers command higher gross margins than the oil‑extraction line‑products, the incremental gross margin should rise by 150‑200 bps, tightening the FY‑2025 adjusted EBITDA margin to the high‑30s range. Consequently, the company will likely upgrade its FY‑2025 revenue outlook to the $1.1‑1.15 bn band (vs. the $1.0 bn previously guided) and lift its earnings per share (EPS) guidance by 5‑7 % (to $0.78‑$0.82).

Trading implications

• Short‑term catalyst: The announcement will trigger a positive price reaction; expect a 4‑6 % rally on the day of the press release as the market digests the upgraded outlook.
  
• Technical outlook: The stock is currently trading near its 20‑day SMA and has broken above the 50‑day EMA, forming a bullish “cup‑and‑handle.” If the rally holds, the next resistance is the $12.00 level; a break could open the path to $13.00.
  
• Positioning: For a medium‑risk bias, consider buying on any pull‑back to the 20‑day SMA (~$10.80) with a stop just below the 50‑day EMA (~$10.30). If the price sustains above $12, add to the position; upside to $13–$14 aligns with the revised earnings guidance and the expanding food‑grade franchise.
  

In short, the second food‑grade contract materially upgrades FSI’s revenue and margin outlook, prompting a likely upward revision of guidance and a bullish short‑ to medium‑term trade set‑up.