Xtract One Technologies is “scaling exactly as it should”, analyst says

Xtract One Technologies (Xtract One Technologies Stock Quote, Chart, News, Analysts, Financials TSXV:XTRA) is set to report Q3 fiscal 2025 results on June 5, and Ventum Capital Markets analyst Amr Ezzat says the company’s scaling trajectory and record backlog support a bullish long-term outlook despite potential near-term volatility.

In his May 29 update, Ezzat maintained a “Buy” rating and $0.80 target, citing the company’s progress toward breakeven EBITDA, lean cost structure and surging bookings as indicators that its threat detection business is “scaling exactly as it should.”

Xtract One Technologies, formerly Patriot One Technologies, develops weapon and threat detection systems for venues like stadiums, schools, casinos, offices and healthcare facilities. Founded in 2016, the company is based in Toronto and operates in North America and internationally.

“Hardware names have seen uneven quarters lately amid macro and tariff-related friction, and we wouldn’t be surprised if that dynamic shows up here too,” Ezzat said. “Quarter-to-quarter forecasting remains inherently difficult given potential delivery slippage, particularly in a model that still has concentrated deployments. That said, the core setup remains intact and increasingly difficult to ignore. With record backlog, surging bookings, a lean cost structure, and breakeven EBITDA on the horizon, we see a business that is scaling exactly as it should. In our view, quarter-to-quarter fluctuations are inevitable at this stage, but they are also beside the point. The longer-term trajectory is compelling.”

Ezzat expects Xtract One to post an Adjusted EBITDA loss of $4.3-million on $18.1-million in revenue for fiscal 2025. He forecasts a turnaround in fiscal 2026, with an Adjusted EBITDA of $1.7-million on $29.8-million in revenue.

Ezzat said the Xtract One story continues to follow the progression from bookings to backlog, installations, revenue, and ultimately EBITDA leverage. While revenue conversion may vary from quarter to quarter, he believes the foundational elements are firmly in place, and the business model is scaling. Operating expenses declined 11% year-over-year last quarter despite double-digit revenue growth, and gross profit continues to expand. He expects the company to reach breakeven soon.

“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,” Ezzat said. “At our target price, Xtract One would trade at 9.4x/5.7x EV/Revenue and 14.5x/8.7x EV/Gross Profit on F2025E/F2026E, respectively, 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.”

-30-