Is Tecogen stock a buy?

Roth Capital Markets analyst Chip Moore reaffirmed his “Buy” rating and $15.00 price target on Tecogen (Tecogen Stock Quote, Chart, News, Analysts, Financials NYSE:TGEN), saying the company is gaining meaningful traction in the emerging data-centre cooling market.

In a November 13 note following Q3 results, Moore said Tecogen’s long-standing expertise in cogeneration positions it to benefit from “a compelling opportunity in the data center cooling market,” supported by a deepening partnership with Vertiv and growing engagement from data-centre developers.

Massachusetts-based Tecogen manufactures natural-gas-driven engine systems and combined heat and power (CHP) units for commercial and industrial sites.

Moore said that “Tecogen has decades of proven experience in cogeneration technology,” a capability he believes is becoming highly relevant as data-centre operators face rising cooling demands and power constraints.

Tecogen is reworking its manufacturing layout to increase throughput by year-end, engaging contract manufacturers, and leaning on Vertiv for supply-chain support. Moore said “a single cooling order with a small-to-medium-sized data center could get Tecogen to breakeven,” giving early deployments outsized financial impact. He also said that “asset-light manufacturing expansion (licensing model or outsourcing) could allow the company to meet accelerated demand from data center customers while driving very attractive profitability.”

Q3 results were less important than the company’s positioning, Moore said, but still showed progress. Revenue of $7.2-million outpaced his $6.7-million estimate, rising 28% year over year, with product sales more than doubling. Gross margin of 30.4% reflected a deliberate $700,000 investment in new-engine testing intended to support future deployments. Tecogen ended the quarter with roughly $15-million in cash, no debt, and about $4-million in backlog.

Moore trimmed his near-term model as Tecogen builds inventory to support initial cooling orders, lowering fiscal 2025 revenue to $26.5-million and fiscal 2026 revenue to $42.6-million. His 2027 forecast remains $74.6-million. He derives his valuation using a 5x multiple on 2027 revenue, arguing that a premium is justified given the scale of the market opening ahead of the company.

Moore said that Tecogen should do US$(5.9)-million in Adjusted EBITDA on revenue of US$26.5-million in fiscal 2025. He said those numbers will improve to US$(2.1)-million on revenue of US$42.6-million in fiscal 2026.

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