Volatus Aerospace still has 257% upside, Echelon says

Following the company’s second quarter results, Echelon Capital Markets analyst Rob Goff thinks there is a lot of money to be made on Volatus Aerospace (Volatus Aerospace Stock Quote, Chart, News, Analysts, Financials TSX:VOL).

On August 28, Volatus reported its Q2, 2023 results. The company posted an Adjusted EBITDA loss of $1.1-million on revenue of $8.7-million, a topline that was up 31 per cent over the same period last year.

“Our Q2 results clearly demonstrate that we’re on track for immediate and long-term efficiencies across all our business lines,” said CEO Glen Lynch. “Our team has demonstrated our ability to grow revenues while simultaneously reducing costs. Sustainable profitability is our highest priority and will be achieved by streamlining corporate objectives and maintaining a responsible culture that delivers results to our clients and rewards all our stakeholders.”

Goff says the results exceed his expectations.

“Given the tough Q123 results, we are pleased to see the improved q/q and solid results,” he said. “The more significant gross profit outperformance reflected the lower mix of product sales at 51% in the quarter from 63% for Q123. Furthermore, results did not include revenues or gains from fleet sales as Volatus continues to retain its full fleet given its strong pipeline. Management cited moves to realize
additional cost reductions where the annualized rate is now at $3.0M, up from $1.5M.”

In a research update to clients August 29, Goff maintained his “Speculative Buy” rating but trimmed his price target on VOL from $0.90 to $0.75, implying a return of 257 per cent at the time of publication.

Goff thinks VOL will post EBITDA of negative $2.6-million on revenue of $43.2-million in fiscal 2023. He expects those numbers will improve to EBITDA of 1.8-million on a topline of $60.7-million the following year.

Disclosure: Volatus Aerospace is an annual sponsor of Cantech Letter.