Is Tantalus Systems still a buy?

Beacon Securities analyst Gabriel Leung reaffirmed his “Buy” rating and C$4.00 target on Tantalus Systems (Tantalus Systems Holdings Stock Quote, Chart, News, Analysts, Financials TSXV:GRID) in a June 12 report, highlighting a major new contract with Riverside Public Utilities as a key milestone that supports the company’s long-term growth outlook.

On June 12, Tantalus announced its largest-ever ERT-to-AMI (advanced metering infrastructure) project with Riverside Public Utilities in California. This multi-year deployment involves replacing 80,000 legacy devices and is expected to generate about $8-million in product revenue and $325,000 in annual maintenance revenue.

This is the largest ERT-to-AMI upgrade project Tantalus has taken on to date.

Vancouver-based Tantalus Systems provides smart grid solutions that help public power and electric co-op utilities modernize and automate their distribution grids. Its technology supports greater reliability, stability, and efficiency and is used by about 320 utilities.

Jennifer Tavaglione, Manager of Technology Innovation at Riverside Public Utilities, said in a June 12 press release that the utility has extended the life of its infrastructure in recent years using Tantalus’ ERT-overlay technology.

“By allowing us to expand the value from our existing infrastructure while still making progress towards grid modernization, we were able to allocate resources to other important initiatives and upgrades,” she said. “Tantalus’ flexibility and willingness to collaborate with our team throughout our grid modernization journey is a testament to their commitment to meeting utilities where they are and not forcing premature replacements of existing infrastructure.”

Tantalus said its partnership with Riverside Public Utilities shows how utilities can move from legacy systems to advanced solutions while aligning upgrades with their own priorities and timelines. By building on existing infrastructure and modernizing at their own pace, RPU took a strategic approach that other utilities are beginning to follow.

“Grid modernization is a journey, and it’s been a privilege to support the team at RPU as they leveraged our ERT-reading capabilities to extend the life of their useful assets,” said Peter Londa, President and CEO of Tantalus.

“We understand that within Tantalus’ existing customer base, ~150 utilities (of a total of ~325) are multi-commodity utilities that continue to utilize electric, water and gas ERTs,” Leung said. “Tantalus is able to support these multi-commodity utilities by modernizing/upgrading a portion of the electric meters while collecting reads from installed ERTs – enabling a utility to upgrade their distribution grid over time.”

Leung sees this as a strong indication of the value and flexibility of Tantalus’s TRUConnect platform and a stepping stone toward broader adoption of its next-generation TRUSense Gateway technology. The company is already working with 33 utilities on trial deployments, representing a potential $100-million pipeline, and up to $500-million when factoring in all current sales efforts.

“In our opinion, today’s announcement is important in that it highlights the large opportunity within Tantalus’ core TRUConnect platform and the flexibility that Tantalus’ customers are able to enjoy as they move forward with their grid modernization journey (at their own pace),” Leung said.

“We also view today’s announcement as a tasty appetizer ahead of the main course, which we view as the first large engagement of the company’s next-generation TRUSense Gateway (cellular/fibre/ethernet) platform, which will enable utilities to gather advanced power quality measurement and behind-the-meter control/load management of smart devices (to incorporate demand-side flexibility and time-of-use rate programs),” he said.

Leung expects Tantalus to generate $1.3-million in Adjusted EBITDA on $51.5-million in revenue in fiscal 2025. He forecasts those figures will improve to $2.6-million in EBITDA on $59.5-million in revenue in fiscal 2026.

Leung reiterated his “Buy” rating and C$4.00 price target for Tantalus Systems, suggesting a potential 68% return from current levels. The firm values the stock at 2.5 times estimated 2026 EV/Sales and points to margin improvements and a sizable market opportunity, noting that “~150 utilities could follow Riverside’s example.”

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