Kraken Robotics could get taken out, this portfolio manager says

Go big or go home. Fresh off a new $2.1-million contract, Newfoundland’s Kraken Robotics (Kraken Robotics Stock Quote, Chart TSXV:PNG) should be looking for more wins, says Peter Imhof of AGF Investments, who thinks Kraken could become an acquisition target.

“The stock has actually done fairly well. It has come off of its highs. [On Thursday] they announced that they signed a new $2.1 million contract, so there are a lot of good things going on with the company,” says Imhof, vice president and portfolio manager at AGF, to BNN Bloomberg on Thursday.

“There is one negative where they weren’t able to file their financials on time. It seems to have been rectified, so I think that there’s a lot of good news flow coming,” he says.

Yesterday, marine tech company Kraken announced the $2.1-million purchase order from US company ThayerMahan Inc for one of Kraken’s Katfish 180 tethered underwater survey vehicles used for seafloor mapping.

“Today’s ocean surveying market is valued at over US$3 billion per year,” said Karl Kenny, Kraken’s President and CEO, in a press release . “Kraken’s customers have requested a high speed, ultra-high resolution seabed mapping solution that leverages our sensor and robotics technology. With Katfish, surveyors can now increase the quantity of seafloor data, significantly improve data quality and lower data acquisition costs – all in real time.”

PNG’s share price took off 12 months ago initially on an equity private placement deal with survey and exploration company Ocean Infinity and eventually boosting the stock from the $0.20 range all the way to a high of $0.92 by March of this year. The stock has slid back since then and has been hanging out in the $0.50 range over the past couple of weeks.

In May, Kraken released its fourth quarter fiscal 2018 results, which while coming in-line with analysts expectations also came with strong guidance from management for the year ahead, calling for a doubling of revenues.

“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,” said Kenny.

Imhof says Kraken’s success may attract interest from bigger fish in the survey and mapping space.

“One of the other companies within their space that just recently got taken out. So, at some point maybe this thing gets taken out,” Imhof says. “The revenues are going to be up quite materially this year and I’d like to see some bigger contracts being awarded to them over the next five months or so and then make sure that they get their financials in line.”