Xtract One Technologies: Buy, Sell or Hold?

Ventum Capital Markets analyst Rob Goff maintained his “Buy” rating and $1.15 target on Xtract One Technologies (Xtract One Technologies Stock Quote, Chart, News, Analysts, Financials TSX:XTRA) ahead of the company’s fiscal Q4 results, citing growing demand for security screening technology in North America and Europe.

In an Oct. 16 preview, Goff said Xtract One is scheduled to report Q4 and full-year fiscal 2026 results after the market closes on Oct. 21.

The analyst expects Q4 revenue of $9.0-million, gross profit of $5.4-million and negative Adjusted EBITDA of $500,000.

His revenue and gross profit forecasts are largely in line with consensus estimates of $8.9-million and $5.3-million, respectively, while his Adjusted EBITDA estimate is below the consensus loss of $200,000.

Goff said the difference reflects expected investments in expanding the company’s salesforce.

The analyst also cautioned that quarterly results can fluctuate depending on the mix of upfront sales and recurring revenue.

“Beyond the noise of quarterly variability, we reiterate that our estimates and consensus should be viewed as baseline given prospective regulatory catalysts and accelerating wins,” he said.

Recurring revenue represented about 20% of total revenue in fiscal Q2 and 30% in Q3. Goff said a shift toward recurring contracts can affect near-term financial results even when underlying business performance is improving.

He expects Xtract One’s $45-million backlog and approximately $120-million qualified sales pipeline to grow as regulatory requirements encourage security screening adoption across education, healthcare, aviation and venues in the United Kingdom.

The sales pipeline has increased from about $87-million a year earlier.

Goff highlighted growing demand from U.S. schools.

On Oct. 2, Willis Independent School District in Texas approved a US$973,000 purchase of 15 Xtract One weapons detection systems, citing positive feedback from another school district using the technology.

Goff said the contract supports the potential for broader deployments across U.S. schools, where the company’s technology allows students to pass through screening without removing laptops from their bags.

He also pointed to increasing interest from Fortune 500 companies, particularly in manufacturing and distribution.

Goff expects favourable regulatory developments in the U.S. and Europe to support wider adoption, with Xtract One’s British Museum contract providing an important reference for potential European customers.

He said commercial pilot wins in fiscal 2027 could establish another growth market, with more meaningful revenue contributions beginning in fiscal 2028.

Goff’s discounted cash flow analysis produces a valuation of $1.31 per share, above his maintained $1.15 target.

The analyst noted that Xtract One trades at 5.6 times estimated calendar 2026 EV/gross profit and 4.2 times calendar 2027, compared with 7.8 times and 6.2 times, respectively, for competitor Evolv Technologies.

Goff expects Xtract One to generate negative Adjusted EBITDA of $3.2-million on revenue of $29.6-million in fiscal 2026, improving to Adjusted EBITDA of $1.2-million on revenue of $41.0-million in fiscal 2027.

He forecasts Adjusted EBITDA of $7.2-million on revenue of $52.4-million in fiscal 2028.

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