Kraken Robotics gets price target raise at Beacon Securities

Following the company’s fourth quarter results, Beacon Securities analyst Gabriel Leung has raised his price target on Kraken Robotics (Kraken Robotics Stock Quote, Chart TSXV:PNG).

On Friday, Kraken reported its Q4 and fiscal 2018 results. In the fourth quarter, the company posted EBITDA of negative $671,000 on revenue of $1.4-million.

“Fiscal 2018 was a transformational year for Kraken, as we saw broader adoption and expansion of our technologies, the acquisition of key people and intellectual properties, and continued demand for our innovative products,” CEO Karl Kenny said. “We also established several strategic relationships with prominent firms that included: Ocean Infinity, ThayerMahan, Leeway Marine, and the National Oceanic and Atmospheric Administration. Our pipeline remains robust and we are confident that in 2019, we can exceed our 2018 performance of doubling revenues annually.”

Leung says the results were largely in-line with his expectations. But the analyst says he is encouraged by the company’s bullish guidance and thinks the company is ready to deliver on its early promise.

“We believe this is an exciting period for Kraken as the fruits of its R&D years pay off in the form of large, long-tail contracts, which could be announced over the near-term,” he says. “We view this as the key catalyst for the stock, our estimates, and our target price.”

In a research update to clients Friday, Leung maintained his “Buy” rating, but raised his one-year price target on Kraken from $0.70 to $1.05, implying a return of 57 per cent at the time of publication.

Leung thinks PNG will post EBITDA of $200,000 on revenue of $15.0-million in fiscal 2019. He expects those numbers will improve to EBITDA of $6.8-million on a topline of $30.0-million the following year.

“As it relates to the 2019 outlook, Kraken is guiding to revenues of over $15M and positive net income,” the analyst adds. “This guidance is based largely on contracts in hand and excludes large Defense/Navy/Military industry bids that are in progress or in contract negotiations and potential work via the Ocean Supercluster (3-year, $23M).”