With Q1 in the books, Ecehlon Wealth Partners analyst Gianluca Tucci is continuing to bet on Kneat.com (Kneat Stock Quote, Chart TSXV:KSI).
In a research update to clients Monday, Tucci maintained his “Speculative Buy” rating and one-year price target of $3.00 on KSI, implying a return of 140 per cent at the time of publication.
The analyst says the potential hinted at in the first few months of this year will be expanded in the remainder of 2019, though it may not be a straight line.
“We are pleased by KSI’s 30% return recorded in Q119 and continue to believe it is on the verge of hitting its stride with its SaaS-based Kneat Gx platform, which addresses the challenge of data validation in the life sciences space,” the analyst says. “In 2018, KSI signed seven new customers, scaled two existing customers and thus far in 2019 has scaled with two existing customers signed in 2018 and onboarded a new global biotech leader. These new customers and seats add to Kneat’s potential install base from its existing customers. This existing potential install base is now 250+ manufacturing sites and translates to an at-scale ARR opportunity of over $30M. We expect continued news flow in 2019 with two SaaS go-live events in Q119 which will serve as further validation of KSI’s value proposition. The importance for real-time validation, visibility and integrity of systems and data, all of which the Kneat Gx platform provides, cannot be understated. We continue to expect near-term qualitative announcements with 2H19 starting to show scalable operating leverage; we believe we could see KSI exit 2019 at a ~$5M run-rate. We forewarn that revs could be lumpy while SaaS revs build up to offset the lumpiness of on-premise revs – the focus is on SaaS. We further highlight that opex timing will vary with scaling momentum.”
Tucci thinks Kneat will post EBITDA of negative $5.8-million on revenue of $2.68-million in fiscal 2019. He expects those numbers will improve to EBITDA of negative $0.9-million on a topline of $9.17-million the following year.