Tantalus Systems earns price target raise at Haywood

Tantalus Systems (Tantalus Systems Holding Stock Quote, Chart, News, Analysts, Financials TSXV:GRID) is well-positioned to benefit from growing pressure on aging utility infrastructure, driven by the proliferation of connected devices, electric vehicles, and extreme weather, according to Haywood Capital Markets analyst Gianluca Tucci.

In a June 18 report, Tucci reiterated his “Buy” rating and raised his target price to C$4.20 from C$3.75, pointing to the company’s expanding customer base and the growth potential of its next-generation TRUSense Gateway.

Vancouver-based Tantalus provides smart grid solutions to public power and electric cooperative utilities, enabling modernization and automation of distribution grids. Its technology is used by about 320 utilities in North America and the Caribbean to improve reliability, efficiency, and resiliency.

Tucci said utilities are facing a convergence of challenges including renewable integration and EV charging that are opening a large market opportunity. The Business Research Company forecasts global grid modernization spending will rise from $39.2-billion in 2025 to more than $70-billion by 2029, driven by a need for software-driven infrastructure.

“This isn’t just about replacing old wires; it’s about building an intelligent, resilient, and responsive energy nervous system,” Tucci said. “We believe a critical piece of this puzzle lies in the hands of software innovators, not just hardware providers.”

Tantalus, he said, is a key player in this shift, enabling utilities to adapt by offering a data-centric, hardware-agnostic platform. “Its platform is unlocking crucial insights, automating operations, and integrating distributed energy resources, effectively turning a fragile, reactive grid into a robust, proactive one.”

Tucci raised his terminal EV/EBITDA multiple on Tantalus to 16.5x from 15.0x, citing improved long-term growth prospects rooted in the company’s software advantage. He also lowered his discount rate to 14% from 15% to reflect its stronger balance sheet.

He estimates Tantalus will generate $2.3-million in Adjusted EBITDA on $52.1-million in revenue in fiscal 2025, improving to $3.9-million in EBITDA on $59.9-million in 2026.

Tucci emphasized that Tantalus’s focus on interoperability, rather than tying solutions to proprietary devices, gives it a cost and flexibility advantage. This approach lets utilities integrate data from existing infrastructure and third-party vendors, reducing barriers to modernization.

The company has shipped more than 3.86 million connected devices and collects over 35,000 15-minute interval reads per meter per year on average. Some customers capture data every five minutes. Its utility client base boasts a 99.4% retention rate.

Tucci said the smart grid IT market is poised for significant growth and that Tantalus’s software-centric platform aligns well with this trend. The broader push for infrastructure upgrades, spurred by climate threats and surging energy demand, makes Tantalus a timely solution provider.

“Recent global outages, from the Iberian Peninsula blackout to Heathrow Airport’s critical failure, highlight the vulnerabilities of legacy grids,” Tucci said. “Tantalus, with its data-centric platform and TRUSense technology, is uniquely equipped to help address these challenges.”

He pointed to the company’s recent expansion contract with Riverside Public Utilities as a key milestone, the largest ERT overlay in its history. Tucci estimates the deal could add about $8-million in revenue over the project’s life and more than $300,000 in annual recurring revenue.

“This is a strong signal of what’s to come,” he said. “Tantalus currently has 33 utilities in the TRUSense activation pipeline, representing over 150,000 endpoints and a potential $100-million revenue opportunity if fully converted.”

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