Tech investors should be watching Covalon Technologies, this analyst says

Research Capital analyst Andre Uddin maintained his “Buy” rating and C$2.90 price target on Covalon Technologies (Covalon Technologies Stock Quote, Chart, News, Analysts, Financials TSXV:COV) in a February 25 healthcare update, following what he characterized as a soft fiscal first quarter.

Covalon reported Q1 fiscal 2026 revenue of $6.9-million for the period ended Dec. 31, 2025, below Uddin’s $8.9-million estimate and down 16% year-over-year from $8.2-million. He attributed the shortfall primarily to lingering disruption from the ownership transition of a U.S. Advanced Wound Care strategic partner and pricing adjustments in that channel.

Uddin said the weakness appears temporary.

Management indicated that revenue recorded during the first half of fiscal Q2 (Jan. 1 to Feb. 15) has already exceeded the full Q1 total of $6.9-million, suggesting improving momentum into fiscal 2026. Uddin expects Q2 revenue of $9.3-million and a return to growth.

Gross margin in Q1 was 58%, above his 56% estimate but below 61% last year, reflecting product mix and pricing adjustments. Adjusted EBITDA was $0.4-million, compared with his $1.6-million forecast and $1.5-million in the prior year.

Net income was $0.1-million, or $0.004 per fully diluted share, versus Uddin’s estimate of $1.3-million, or $0.04 per share.

During the quarter, Covalon added 12 new hospital customers, and Uddin continues to see the Vascular Access portfolio as the primary growth driver over the next five years. The company also recently received new manufacturing equipment and expects automation to improve operating efficiencies.

As of Dec. 31, Covalon had $17.9-million in cash and no debt.

Uddin said he continues to view the company as a growth-at-a-reasonable-price opportunity, noting the stock has declined over the past five quarters on weaker-than-expected sales but could see improvement as revenue rebounds in Q2.

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