Kneat.com has tonnes of upside, says Echelon Wealth

In a move which Echelon Wealth Partners analyst Gianluca Tucci calls a notable win for the company, kneat.com (kneat.com News, Stock Quote, Chat TSXV:KSI) has announced a new customer in the growing contract development and manufacturing organization (CDMO) space. On Monday, Tucci provided a client update on Kneat and reiterated his “Speculative Buy” rating and $3.00 target price.

Canadian data management company Kneat made the announcement on Monday, stating that a global CDMO has chosen Kneat’s platform to digitize their commissioning, qualification and validation work processes.

kneat.com keep “Speculative Buy” rating at Echelon Wealth Partners

“We’re happy to be fulfilling such a key role within this customer’s highly regulated GMP manufacturing facility,” said Kneat’s CEO Eddie Ryan in a press release. “Partnering with this global organization in the growing CDMO space represents an important opportunity for Kneat and entry into a key market within the life sciences industry.”

Noting that market growth for CDMOs is forecasted to grow by five to 6.5 per cent over the next five years, Tucci says that the customer pickup amounts to a win in diversifying Kneat’s current customer based in a subsegment of the life sciences industry that could grow into a “meaningful portion of its longer-term business and further supports our view of a second half of 2019 ramp, of which we could see Kneat exit 2019 on an approximately $5-million run rate.”

“We continue to believe KSI 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,” says Tucci.

“We expect continued news flow with additional go-live and scaling events 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 H219 starting to show scaling, particularly Q419. We forewarn that revenues could be lumpy while SaaS revenues build up to offset the lumpiness of on-premise revenues – the focus is on SaaS,” writes Tucci.

The analyst is calling for fiscal 2019 revenue and EBITDA of $2.67 million and negative $5.2 million, respectively, and fiscal 2020 revenue and EBITDA of 9.15 million and negative $0.9 million, respectively. His $3.00 target represents a projected 12-month return of 152 per cent at the time of publication.