Echelon lowers price target on Nubeva Technologies, still sees big upside

Following the company’s first quarter results, Echelon Wealth Partners analyst Gianluca Tucci has lowered his price target on Nubeva Technologies (Quote, Chart TSXV:NBVA).

This morning, Nubeva reported its Q1, 2019 results. The company earned (US) $414,956 on revenue of $1.7-million.

“I am very pleased with our performance so far,” CEO Randy Chou said. “Our first quarter results reflect that we have exceeded our milestone with respect to token presales. Token pre-sales are expected to provide Nubeva with non-dilutive capital to launch our token network and provide our security platform to a wide target market outside North America. At the same time, our core business continues to progress as our product development is ahead of plan. With our growing sales and marketing teams, we are better positioned to bring our innovative solutions to businesses in and moving to the public cloud.”

Tucci notes that the quarter bested his expectations on both the top and bottom line, as he had modeled the company losing a penny a share (it earned $0.01 per share) on revenue of $750,000. But the analyst, who today assumed coverage of the stock from another analyst, explained why he has cut the price target on NBVA from $4.00 to $3.00.

“We are taking the disciplined move to realign our PT to $3.00,” Tucci explains. “Our move is designed to leave upside associated with prospective strategic initiatives and/or operational outperformance against our baseline forecasts. As we have not moved our longer term forecasts (2019 were raised with these results) our PT move leaves additional upside and further reflects on existing capital market discounts. We maintain our SPECULATIVE BUY rating while moving our DCF based target to C$3.00. We note that with this report coverage has been transferred to the named
analyst.”

Tucci expects Nubeva will generate Adjusted EBITDA of negative $1.3-million on revenue of $5.3-million in fiscal 2019. He expects those numbers will improve to EBITDA of positive $1.9-million on a topline of $13.9-milion the following year.