EnWave Corp has a 52 per cent upside, Industrial Alliance says

Look for EnWave Corporation (EnWave Corporation Stock Quote, Chart TSXV:ENW) to keep its positive momentum rolling into 2019, says analyst Neil Linsdell of Industrial Alliance Securities. Ahead of the company’s first quarter fiscal 2019 report due on February 28, the analyst is maintaining his “Buy” rating and $2.35 target price, representing a projected 12-month return of 51.6 per cent at the time of publication.

Makers of commercial-scale dehydration platforms, EnWave is seeing success with its Moon Cheese product out of its NutraDried wholly owned subsidiary, while the company continues to expand in the cannabis space.

In a research update to clients Thursday, Linsdell notes that EnWave is building cannabis company Tilray’s third REV (Revolutionary Dehydration Technology) unit, bringing its capacity to 130kW. The Green Organic Dutchman joined as a sub-licensee last month, ordering its first unit and Your Wasabi Farms expanded its license to use its REV unit to dry industrial hemp. Finally, last April EnWave announced a TELOA with one of Canada’s largest licensed producers (still unnamed) and an exclusive option to license its technology for processing cannabis in a European country.

For ENW’s Q1/19, Linsdell expects revenue growth of 68 per cent to $7.6 million and Adj. EBITDA to $1.5 million from $0.3 million a year prior and EPS of $0.01 per share, up from negative $0.01 per share.

“Ongoing announcements of progress and orders with partners across various markets provide further support to our positive outlook, which includes still significant growth from EnWave’s wholly owned subsidiary NutraDried, as it continues to roll out Moon Cheese snacks through Costco divisions across the US,” says Linsdell.

The analyst sees EnWave generating Adj. EBITDA in 2019 of $9.4 million on revenue of $22.8 million and Adj. EBITDA in 2020 of $14.7 million on a top line of $54.7 million.