Xtract One is a turnaround story with teeth, Ventum says

Ventum Capital Markets analyst Amr Ezzat reiterated a “Buy” rating and $0.80 price target for Xtract One Technologies (Xtract One Technologies Stock Quote, Chart, News, Analysts, Financials TSXV:XTRA) in a June 18 note, saying the company’s recent capital raise was critical to scaling execution amid record backlog, a growing sales pipeline, and the upcoming launch of its One Gateway product.

Ezzat said the full take-up of the offering, including the over-allotment, signals rising institutional interest. While execution risk remains, he said the upside potential is compelling, with the target implying a 128.6% return from current levels.

“Xtract One closed its previously announced bought deal unit financing, including the full exercise of the 15% overallotment option, bringing total gross proceeds to $8.1M (20.7M units at $0.39/unit),” Ezzat said. “Each unit comprises one common share and one common share purchase warrant (3-year term, $0.49 strike). Net proceeds of $7.5M will bolster working capital and general corporate reserves as the Company advances execution across its expanding deployment pipeline. Pro forma basic shares outstanding increase to 239.1M (from 218.4M prior). Our fully diluted share count for valuation purposes is 263.0M shares, which includes the post-offering basic share count plus net TSM dilution.”

Ezzat thinks that Xtract will post an Adjusted EBITDA loss of $6.9-million on revenue of $15.4-million in fiscal 2025. He expects those numbers to improve to $1.7-million in Adjusted EBITDA on revenue of $29.8-million in fiscal 2026.

“Our $0.80/shr target price is supported by a DCF analysis (13.0% discount rate, 4.0% terminal growth) and reflects the Company’s strong growth outlook and pending profitability inflection. Our valuation applies the treasury stock method (TSM) to all outstanding options and warrants (88.9M total instruments), resulting in net dilution of 23.9M shares at our target price of $0.80/share,” he said. “Accordingly, our fully diluted share count for valuation purposes is 263.0M shares, which includes the post-offering basic share count plus net TSM dilution. At our target price, Xtract One would trade at 5.8x EV/Revenue and 6.7x EV/Gross Profit on our F2026E forecasts, a valuation we consider attractive given its >50% revenue growth profile and expanding margins.

“We believe this target fairly captures Xtract One’s risk-reward, and see additional upside if the Company exceeds our base-case growth assumptions or accelerates its timeline to positive free cash flow.”

He said Xtract One is a turnaround story with teeth.

“What began as a fragmented tech platform has been rebuilt into a focused, execution-driven physical security provider under CEO Peter Evans and CFO Karen Hersh.”

Since fiscal 2022, revenue has grown nearly fivefold, bookings have increased tenfold, and backlog has expanded eightfold, demonstrating accelerating adoption across various sectors. Gross margins have consistently stayed above 60%, while operating expenses have grown modestly, supporting strong unit economics and pointing to breakeven EBITDA within the next few quarters.

“Yet despite this progress, the market has yet to fully recalibrate its perception of Xtract, with the stock still reflecting legacy risk factors that no longer align with the Company’s current fundamentals – a disconnect we believe will correct as profitability comes into view,” Ezzat said. “In our view, Xtract One offers a rare combination of high growth, a near-term path to profitability, and strong competitive positioning – at a valuation that fails to reflect this progress.”

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