SKYX Platforms Corp.'s (SKYX:NASDAQ) Q2/24 financial results were solid and thus, bode well for the company's near-term growth, reported Patrick McCann, research analyst at Noble Capital Markets, in an Aug. 15 research note. SKYX develops and provides safe and smart technology platforms for homes and commercial buildings.
"The sequential revenue growth coupled with a diminishing cash burn should serve as a favorable indicator of the company's ability to execute its growth strategy," McCann wrote.
400% potential return
SKYX's current share price is about $1, McCann noted, 0.7 times enterprise value (EV) and therefore "well below peers."
Noble's target price, however, implies a valuation closer to that of peers but still accounting for their being cash flow positive and SKYX not. At $5 per share, the target reflects a multiple of about 3.5 times EV to Noble's 2025 revenue forecast.
"The prospect for mandatory National Electrical Code standardization approval represents significant upside potential for the shares, as such a move could enhance [SKYX's] revenue growth trajectory," added McCann.
The return to target from SKYX's current share price implies a return for investors of 400%.
The Florida-based company remains rated Outperform.
Continued revenue growth
McCann pointed out SKYX's Q2/24 revenue and adjusted EBITDA loss and wrote that the company's execution during the quarter was "on target."
Revenue came in at $21.4 million ($21.4M), in line with Noble's forecast of $22M.
Adjusted EBITDA loss was a beat, at $2.1M, down from $4.5M in Q1/24 and compared to Noble's predicted $4M.
As for the balance sheet at quarter's end, June 30, 2024, SKYX had $12.7M in cash and restricted cash and about $17.8M in debt.
"We anticipate that the company will turn cash flow positive during 2025," McCann wrote.
More products, greater availability
SKYX continues expanding its product line and its distribution scope, both positive for future revenue growth, McCann highlighted.
As for the recent news that Home Depot will carry SKYX's products, already they are available via the home improvement retailer's website, the analyst noted, and various products should appear in certain Home Depot stores in the next few months.
"We view this as a significant expansion that furthers the company's ability to reach both the retail and professional channels at scale," wrote McCann. The Home Depot opportunity "could accelerate revenue growth in both customer verticals."
Also, McCann reported, SKYX is expanding its product line. For one, the company recently debuted its recess lighting solution.
Further, according to management, in the next several months the company's next generation technology, the Sky Platform, should enter production. The platform is a smart hub designed to simplify integrating technology in the home. Doubling as a light fixture base, the product will be mounted on the ceiling and compatible with virtual assistant technology like Amazon's Alexa and Apple's Siri.
Q3, Q4 estimates unchanged
Given its quarterly results, its arrangement with Home Depot and its new products, McCann expressed he remains bullish on SKYX in the near future. He maintained Noble's revenue forecasts of $24.1M in Q3/24 and $28M in Q4/24.
"We expect quarterly revenue to grow sequentially as key partnerships and widening distribution channels take effect," McCann wrote.
Adjusted EBITDA projections for the rest of 2024 remain the same, at a loss of $3.4M in Q3/24 and a loss of $2.1M in Q4/24.
The analyst explained that the greater-than-expected adjusted EBITDA losses could result from SKYX opting to "fuel revenue growth opportunities as they arise within the distribution channels."
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