EnWave Corp’s success with Costco is just the beginning, Industrial Alliance says

A big vote of confidence from a major retailer is a sign of better things to come for EnWave Corp. (EnWave Corp. Stock Quote, Chart, News: TSXV:ENW), Industrial Alliance Securities analyst Neil Linsdell says.

On Wednesday, EnWave announced it had received a large repeat order of its Moon Cheese snack from Costco Wholesale Corp.’s Midwest division.

“Current Moon Cheese sales success in Costco represents a significant positive revenue opportunity for NutraDried, but does not guarantee long-term Costco distribution,” the company cautioned in the press release. “This expanded trial launch is NutraDried’s first attempt at selling club-format branded Moon Cheese product. NutraDried is vigorously pursuing additional club-format distribution opportunities to build momentum from the current aforementioned success.”

Linsdell says he sees this as a jumping-off point for EnWave.

“EnWave has entered into a total of 24 royalty-bearing commercial licenses with major food processing, medical cannabis and pharmaceutical companies for the use of its proprietary REV™ technology,” the analyst notes. “We have seen a significant ramp-up in partnerships and unit deliveries over the last few years, with Moon Cheese and Tilray both demonstrating the value of EnWave’s technology. We believe the pace of trials and new license agreements will further increase, bringing positive EBITDA this fiscal year and move the Company closer to the point where it can start paying out the royalty stream as dividends to EnWave shareholders.”

In a research update to clients today, Linsdell maintained his “Buy” rating and one-year price target of $1.50 on EnWave, implying a return of 25.0 per cent at the time of publication, including dividend.

Linsdell thinks EnWave will generate EBITDA of $1.0-million on revenue of $20.2-million in fiscal 2018. He expects those numbers will improve to EBITDA of $4.9-million on a topline of $29.6-million the following year.