Eguana Technologies could take off, Mackie Research says

A positive endorsement from Mercedes Benz is just what Eguana Technologies (Eguana Technologies Stock Quote, Chart, News: TSXV:EGT) needs to boost its range-bound share price, says analyst Nikhil Thadani of Mackie Research Capital.

On Wednesday, Calgary-based Eguana announced that its long-standing partner Mercedes Benz Energy GmbH (MBE) was endorsing Eguagna’s Evolve home energy storage system, meaning that MBE will be recommending that its distributors source their residential energy storage products directly from Eguana.

“Under the original private label agreement all systems were destined for the Australian market, however with this transition Mercedes has opened additional markets for Eguana’s Evolve and other product lines,” said Eguana CEO Justin Holland in a press release. “MBE sales worked with us to transition additional distributors in Australia, Europe, Africa, and the Middle East. We are very excited to see our products move into this rapidly expanding distribution network.”

Thadani says to expect positive news and revenue catalysts over the second half of 2018.

“EGT indicated that the initial MBE related product roll-out, which was planned to begin in June, is expected to take place throughout Q4 (Sept) F2018. As a result, we expect Q3 (Jun) F2018 revenue to be down to ~$300-400K from ~$1 million in Q2 (Mar) F2018 with a strong pick up in H2 C2018,” says the analyst in a client update on Wednesday. “We expect C2018 revenue should be >$10 million if this strategy plays out successfully. As a leading indicator of this revenue traction, we would expect to see a steady stream of new direct global distributor announcements by EGT in the coming weeks.”

EGT has been trading sideways over the past few months, but the new announcement should help, says Thadani.

“Today’s announcement opens up a path for distributors in Europe, Africa, and the Middle East. Additional geographies could increase C2019’s addressable market by about 70 per cent, per our discussions with management,” says the analyst.

Thadani rates Eguana Technologies a “Speculative Buy” with a one-year target price of $0.70, which represented a 289 per cent return at the time of publication.