A new application for a previously-patented technology has Colin Healey of Haywood Capital Markets looking very favourably upon Exro Technologies (Exro Technologies Stock Quote, Chart, News, Analysts, Financials TSXV:EXRO), maintaining his Buy rating on the company, along with a previously-reported $8.00/sh target price and status as one of Haywood’s Top Picks in a piece published on Thursday, July 15.
The positivity surrounding Exro, a leading clean technology company with a new class of power electronics for electric motors and batteries based in Calgary, focuses on a new emphasis on the company’s patented Coil Driver technology, which has the potential to dramatically reduce the cost and complexity associated with deploying electric vehicle infrastructure at scale.
Healey points to Exro’s continued development and improved configurations for the Coil Driver as positive signs for the company’s growth on a path to commercialization.
“Most popular full EVs will be fed AC from wall power, which is converted within the vehicle to DC to charge the batteries, except (importantly) when a fast-charger is connected, in which case, the external fast charger feeds DC directly to the vehicle,” he said. “This new configuration of Exro’s Coil Driver technology would potentially eliminate the need for DC delivery from the external fast charger infrastructure, vastly simplifying and reducing the cost of external fast-charging infrastructure roll-out. The reconfigured Coil Driver consolidates the motor drive and on-board charger, ensuring the battery gets the charge current required from the input source.”
Though it has already showcased its versatility, Healey believes the Coil Driver is capable of making a real-world impact in the power sector.
“In addition to the new use case, which consolidates or eliminates electrical system complexities, Exro is working to develop and test the Coil Driver’s potential to deliver a grid-connected energy storage solution, which would enable EVs to discharge into the grid (vehicle-to-grid, V2G), creating a platform for EVs, particularly heavy-duty EV fleets, to act as mobile energy storage systems which could be used for emergency or back-up power,” the analyst added.
Having already been shown to improve the performance and cost of powertrain applications in electric vehicles, the company says initial findings have shown Exro’s Coil Driver can also be used to enable EVs to seamlessly fast charge and provide electricity back to the grid regardless of power source or charger type.
“Unlocking the ability for the Coil Driverᵀᴹ to simplify and streamline fast charger deployments for charge point operators and automakers has the potential to be a game changer,” said Exro CEO Sue Ozdemir in the company’s July 15 press release. “We hope that this will provide a path to standardization and enable EV charging infrastructure to scale at the pace needed to reach EV goals. This is a great example of how Exro continues to innovate and find new integrated solutions for our core technologies as the EV market continues to evolve.”
The announcement is the latest in a string of news items for Exro, which officially received final approval to list its common shares on the Toronto Stock Exchange beginning July 8. In April, the company also announced a supply agreement with Vicinity Motor Corp., where the Vancouver-based manufacturer of transportation vehicles for the public and commercial segments in the US and Canadian markets would test and validate the Coil Driver with the intent of using it in future fleets of its electric buses.
While the stock is currently down 12 per cent year-to-date, Haywood projections have Exro taking significant financial steps within the next two years, with the company set to break even in its gross margins ($900,000 forecast) in 2021, projecting to $22.2 million by 2023 based on gross margin continuing to represent 40% of the company’s revenues, which are forecast to be around $55.5 million in two years.
In that time, the company’s EBITDA is also projected to move from negative to positive, with Hayward forecasting a move from -$8.6 million in 2021 to $8 million in the positive by 2023.
There is also potentially significant value to be had with this investment, as Haywood reports Exro trades at a blended 2022e/2023e EV/Revenue of 13.3x, as opposed to the forecasted 7.3x 2022/2023e EV/Revenue for other high growth proof-of-concept transitioning companies.
In its current state, Healey sees Exro as a stock to strongly consider with its presently discounted position, as it had been trading in the $5.50-$6.50/sh share range earlier this year.
“Today’s news is important as it highlights Exro’s focus on innovating and leveraging the potential of its existing technology suite across the EV ecosystem and beyond,” he said. “We continue to like Exro and expect further news flow of this type to incrementally move the stock higher and recommend adding to positions as the Company progresses towards formal commercialization of multiple technologies.”
Healy’s price target represented a return of 100.5 per cent at the time of publication.