Volatus has a 580% upside, Echelon says

A recent development at Volatus Aerospace (Volatus Aerospace Stock Quote, Chart, News, Analysts, Financials TSX:VOL) has Echelon analyst Rob Goff maintaining his bullish stance on the stock.

Last week, VOL announced it had received authorization from the Federal Aviation Administration for commercial agricultural aircraft operations using drones. The use of drones for agricultural spraying was cleared by Transport Canada in July of 2017.

Goff says this news clears a path for VOL that should result in an easier sales cycle.

“The FAA approval permits VOL’s subsidiary, Volatus Aerospace USA Corp., to operate approved drones weighing 55 pounds (25kg) or more for agricultural purposes under FAA Part 137 regulations,” the analyst explained. “Currently, VOL generates revenue through the sale of equipment and data provision services for crop management. However, this approval enables VOL to train and contract customers to operate its drones under its commercial program, thereby reducing the regulatory burden and providing a recurring revenue stream. This allows VOL to benefit from the sale, charter or operational support of agricultural drones, as well as creates recurring revenue opportunities from the operation, management, and maintenance. This is even more favourable as the approval process is tedious and lengthy and, therefore, is a common deterrent for most customers to undergo the regulatory process. Only about 10-15 of its competitors have been granted this license. Furthermore, this approval, coupled with Volatus’ Special Flight Operating Certificate in Canada (announced in May 2023), allows the Company to extend these services to large-scale clients in agriculture, forestry, and environmental management.”

In a research update to clients February 20, Goff maintained his “Speculative Buy” rating and one-year price target of $0.68 on VOL, implying a return of 580 per cent at the time of publication.

Goff thinks VOL will post an EBITDA loss of $3.8-million on revenue of $32.4-million in fiscal 2023. He expects those numbers will improve to EBITDA of positive $1.8-million on a topline of $53.8-million the following year.