Tantalus Systems wins price target raise at Paradigm

Following the company’s fourth quarter results, Paradigm Capital analyst Daniel Rosenberg has raised his price target on Tantalus Systems (Tantalus Systems Stock Quote, Chart, News, Analysts, Financials TSX:GRID).

On March 19, GRID reported its Q4 and fiscal 2024 results. In the fourth quarter, the company posted Adjusted EBITDA of $1.4-million on revenue of $12.6-million.

“Thanks to the hard work of our entire team and continued expansion of our community of customers, Tantalus was able to deliver record results in 2024 and reinforce our positive momentum heading into 2025,” CEO Peter Londa said. “We delivered another year of growth and reverted to positive Adjusted EBITDA for the year, all while making significant investments in the commercialization of the TRUSense Gateway™. We continue to gain traction with the TRUSense Gateway as utilities seek flexible and cost-effective solutions to modernize their distribution grids. Going into 2025, we believe Tantalus is well-positioned to help utilities accelerate their grid modernization efforts.”

Rosenberg said this report was a clear positive for GRID.

“GRID reported Q4 results that were ahead of expectations,” he wrote. “Revenue increased 21% y/y driven by the software and services division that posted 36% growth. Over the year it added 31 new utility customers, bringing its total customer count to ~320. Management noted that it is pipeline of opportunity with the TRUSense Gateway is progressing well. Pilots of TRUSense continue to mount, building momentum into 2025 and beyond.”

In a research update to clients March 20, Rosenberg maintained his “Buy” rating and raised his price target on GRID from $3.00 to $3.25.

The analyst thinks the company will post Adjusted EBITDA of $2.6-million on revenue of $51.3-million in fiscal 2025. He expects those numbers will be Adjusted EBITDA of $4.1-million on revenue of $60.2-million in fiscal 2026.

“We value Tantalus using a 2.0x multiple on our newly introduced 2026 estimates,” Rosenberg concluded. “This results in our C$3.25 target price (C$3.00 prior). Our comparable peers consist of IoT players who trade at an average of 4.0x 2026e EV/revenue and smart grid companies at 2.8x. Tantalus currently trades at an attractive 0.9x 2026e revenue. We continue to highlight the significant potential behind TRUSense with regulatory hurdles now complete. We believe we can see TRUSense revenue mount with a significant ramp-up through 2025.”