EnWave is a buy, this analyst says

Clarus Securities analyst Noel Atkinson initiated coverage of EnWave (EnWave Stock Quote, Chart, News, Analysts, Financials TSXV:ENW) on Sept. 23 with a “Speculative Buy” rating and a 12-month price target of 80 cents, arguing the company is entering a multi-year growth cycle as adoption of its proprietary dehydration technology expands among global consumer goods companies.

“EnWave is increasingly gaining traction with global and regional consumer packaged goods companies for deployment of its industrial dehydration systems for snack foods and other applications,” Atkinson said. “Sales have accelerated year-over-year so far in FY2025 and the sales funnel has been expanding worldwide. We expect significant acceleration in equipment sales and associated production royalties through our forecast period, which should drive the business to positive adjusted EBITDA and free cash flow.”

Founded in 1994 and commercializing technology developed at the University of British Columbia, EnWave manufactures vacuum-microwave dehydration systems for food producers worldwide. Its core Radiant Energy Vacuum process dries food from the inside out under vacuum pressure, reducing production runs to as little as one to two hours compared to eight hours for air drying and up to 24 hours for freeze drying. The systems are marketed as faster, more energy-efficient and better at preserving flavour and nutritional content than traditional methods.

Atkinson noted that while equipment sales will drive the near-term growth trajectory, EnWave’s longer-term upside depends heavily on scaling its high-margin royalty stream. Royalties are tied to production volumes and are expected to climb steadily as installed systems increase and customers expand utilization.

“The recurring nature of royalty revenue is what gives the story its long runway,” he said, adding that growing validation from large multinational customers and expansion orders from existing buyers provide strong visibility.

The analyst also highlighted the company’s strengthened balance sheet following its first equity raise since 2019, with proceeds earmarked to increase inventory and shorten turnaround times on new orders. Partnerships such as its collaboration with GEA in biopharmaceutical drying applications could further broaden the opportunity set.

“We see ENW at the beginning of a multi-year ramp of system sales and royalty revenue,” Atkinson said. “Other Canadian small-cap, tech-enabled equipment companies trade at substantially higher EV/sales multiples than ENW, and we expect its shares to re-rate higher as the cadence of equipment sales accelerates.”

On his forecasts, Atkinson expects EnWave to post an Adjusted EBITDA loss of $1.0-million on $12.4-million in revenue in fiscal 2025, improving to positive EBITDA of $1.4-million on $17.1-million in revenue in fiscal 2026.

His $0.80  target price is based on a sum-of-the-parts analysis using FY2027 estimated revenue, applying a four-times EV/sales multiple, a discount to Canadian small-cap industrial technology peers.

-30-