Co. Strategically Expands Its Drone Portfolio
Research Report

1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Red Cat Holdings Inc.
2.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

For additional disclosures, please click here.

Disclosures for Think Equity, Red Cat Holdings Inc., November 4, 2024

Analyst Certification The analyst, Ashok Kumar, responsible for the preparation of this research report attests to the following: (1) that the views and opinions rendered in this research report reflect his or her personal views about the subject companies or issuers; and (2) that no part of the research analyst’s compensation was, is, or will be directly related to the specific recommendations or views in this research report. Financial Interests The analyst, Ashok Kumar, has no financial interest in the debt or equity securities of the subject company of this report. Further, no member of his household has any financial interest in the securities of the subject company. Neither the analyst, nor any member of his household, is an officer, director, or advisory board member of the issuer(s) or has another significant affiliation with the issuer(s) that is the subject of this research report. The analyst has not received compensation from the subject company. The CEO of ThinkEquity, LLC., owns shares in the company. At the time of this research report, the analyst does not know, or have reason to know, of any other material conflict of interest. Company Specific Disclosures ThinkEquity, LLC is a member of FINRA and SIPC. ThinkEquity, LLC or an affiliate has a client relationship with and has received compensation from this subject company Red Cat Holdings, Inc. in the last 12 months.

ThinkEquity, LLC ThinkEquity, LLC is a member of FINRA and SIPC. ThinkEquity expects to receive or intends to seek investment banking business from the subject company in the next three months. ThinkEquity does not make a market in the securities of the subject company of this report at the time of publication. ThinkEquity does not hold a beneficial ownership of more than 1% or more of any class of common equity securities of the subject company. This report is for information purposes only. Under no circumstances is it to be used or considered as an offer to sell, or a solicitation of an offer to buy any security. While the information contained in this report has been obtained from sources believed to be reliable, we have not independently verified the information and we do not represent or guarantee that the report is accurate or complete and it should not be relied upon as such. Any references or citations to, or excerpts from, third-party information or data sources (including, but not limited to, Bloomberg and Capital IQ) do not and are not intended to provide financial or investment advice and are not to be relied upon by anyone as providing financial or investment advice. Based on public information available to us, prices and opinions expressed in this report reflect judgments as of the date hereof and are subject to change without notice. The securities covered by or mentioned in this report involve substantial risk and should generally be purchased only by investors able to accept such risk. This research report and the securities mentioned herein, some of which may not be registered under the Securities Act of 1933, are intended only for Qualified Institutional Buyers (QIBs), as defined under Rule 144A. Any opinions expressed assume that this type of investment is suitable for the investor. Ratings Definitions ThinkEquity rating definitions are expressed as the total return relative to the expected performance of S&P 500 over a 12-month period. BUY (B) - Total return expected to exceed S&P 500 by at least 10% HOLD (H) - Total return expected to be in-line with S&P 500 SELL (S) - Total return expected to underperform S&P 500 by at least 10% Current Ratings Distribution This Equity Ratings Distribution reflects the percentage distribution for rated equity securities for the twelve month period June 30, 2019 through June 30, 2020. Within the twelve month period ended June 30, 2020, ThinkEquity, LLC has provided investment banking services to 54% of companies with equity rated a Buy, 0% of companies with equity rated a Hold and 0% of companies with equity rated a Sell. As of June 30, 2020, ThinkEquity, LLC had twentythree stocks under coverage: Buy 23 (100%), Hold 0 (0%), Sell 0 (0%).

ThinkEquity analyst Dr. Ashok Kumar, in a research report published on November 4, 2024, maintained a Buy rating on Red Cat Holdings Inc. (RCAT:NASDAQ) with a price target of US$5.00. The report follows Red Cat's strategic expansion of its drone portfolio and recent financial results.

Kumar highlighted the company's strong revenue growth, stating, "In the first quarter of Fiscal 2025, Red Cat achieved record revenue of US$2.8 million, a 59% increase from US$1.7 million in the prior year." He noted this growth came "despite disruptions from manufacturing adjustments."

The analyst emphasized Red Cat's operational progress, noting that the company "delivered 40 systems to the Army and developed Teal 3 units for demonstrations, setting the stage for high-volume production." He added that the company is "implementing quality management systems to meet scaling demands, aiming for AS9100 certification in 2025."

Regarding the company's product portfolio, Kumar stated, "Red Cat has evolved from a single product to a diverse Family of Systems, reducing investment risk and broadening revenue potential. The portfolio includes Edge 130 Blue, Teal 2 (with Teal 3 forthcoming), and FANG, each offering unique capabilities for defense applications."

The report highlighted Red Cat's financial position and recent capital raise, noting the company "secured US$8 million in funding from Lind Global Asset Management X LLC through a Securities Purchase Agreement" in September 2024.

ThinkEquity's valuation methodology is based on a revenue multiple approach. Kumar explained, "Our 12-month price target for Red Cat is US$5, representing an 8x multiple on Calendar 2025 estimated sales. This valuation aligns with industry peer averages." He projects "an increase in Red Cat's annual revenues to US$50.0 million in Calendar 2025."

In conclusion, ThinkEquity's maintenance of their Buy rating and US$5 target price reflects confidence in Red Cat's growth strategy and market positioning. The share price at the time of the report of US$3.06 represents a potential return of approximately 63% to the analyst's target price.