Don’t worry about Kraken Robotics, this analyst says

Kraken Robotics (Kraken Robotics Stock Quote, Chart, News, Analysts, Financials TSXV:PNG) may have lost a key navy contract in Singapore, but Beacon Securities analyst Gabriel Leung says the company’s broader pipeline remains intact and the stock still merits a “Buy” rating and C$3.25 target.

Thales announced it had been awarded a contract through ST Engineering to supply the Republic of Singapore Navy with a mine countermeasures system called Pathmaster. This includes the M-Cube mission system, TSAS towed sonars, and MiMap sonar data analysis tools, all of which will be used on ST Engineering’s uncrewed surface vehicles.

In a corporate update on May 20, Leung said, “We believe this is related to the Singapore Mine Hunting System RFP that Kraken was pursuing and where Thales was the incumbent provider. We had estimated this RFP to be a multi-year $50M opportunity. Obviously, the news is disappointing given the size of the RFP, along with the fact that this is the first mine-hunting system RFP that we believe Kraken has been unsuccessful when bidding against larger incumbent providers.”

He added that this setback likely wouldn’t impact Kraken’s 2025 financial guidance, which already accounted for variability and projected revenue of $120–135-million and EBITDA of $26–34-million. He also said this loss won’t affect Kraken’s other potential contracts.

“We do not believe this will impact the company’s subsea battery opportunities with Anduril and other potential customers, which could dwarf Singapore (to the point that Kraken is significantly expanding its battery production capacity).”

Leung expects Kraken Robotics to generate $128.2-million in revenue and $27.9-million in adjusted EBITDA in fiscal 2025, rising to $149.5-million in revenue and $33.7-million in EBITDA in fiscal 2026.

Leung said the company is still actively pursuing multiple NATO Navy projects, including those with Italy, Poland, the U.K. and the U.S.

“We understand the (large) U.S. opportunity could move forward as early as the current calendar year in terms of bid submission and award. Given the large potential pipeline of opportunities, we are maintaining our Buy rating and $3.25 target, which is based on 25x CY26e EV/EBITDA.”

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