A building order book should soon result in Eguana Technologies (TSXV:EGT) beginning to fulfill its promise, says Mackie Research Capital analyst Nikhil Thadani.
This morning, Eguana reported its Q2, 2017 results. The company posted revenue of approximately $330,000. Management said demand for its AC battery for resdiential solar storage in Hawaii continues to accelerate and will be the main driver of revenue growth for the rest of 2017. The company cites an expedited approval process for its grid interactive lithium-based system as a catalyst.
“This expedited approval process has accelerated sales and installation activities in Hawaii, doubling our U.S. order book,” said CEO Justin Holland. “Standard system sizes are also larger than anticipated with 60 per cent of current orders at 19.2 kilowatt-hours or higher, giving us a advantage in the market with our AC battery which is expandable without the need for additional power controls, increasing the per sale revenue and contribution.”
Thadani says you can continue to expect volatility from Eguana, and he is not yet ready to introduce quarterly estimates, but says some positives are appearing.
“EGT stock is down ~40% year-to-date as revenue generation has been slower than initially expected despite a nicely building order book,” says the analyst. “As we have previously highlighted, we expect stock price volatility during EGT’s revenue build-out phase. We hope to see consistent quarterly revenue from Q3 (Jun) / Q4 (Sept) F2017. Recall, the company’s recent peak quarterly revenue was ~$1.5 mln/qtr (in F2015), we expect similar levels in H2 C2017.”
In research update to clients today, Thadani maintained his “Speculative Buy” rating and one-year price target of $0.70, implying a return of 289 per cent at the time of publication.