Noble Capital Markets analyst Patrick McCann initiated coverage on SKYX Platforms Corp. (SKYX:NASDAQ) with an Outperform rating and a price target of US$5.00, according to a research note published on April 29, 2024. The analyst believes that SKYX shares could offer investors significant upside due to the growth of the smart home technology industry and the prospect of one of the most impactful electrical safety developments in the last 40 years.
"SKYX Platforms is an innovative developer of smart home technologies that improve safety in residential and commercial buildings. The company holds over 30 patents with approximately 60 pending," McCann stated.
The analyst provided a favorable outlook for the company, estimating that revenue will grow roughly 60% from the prior year, reaching US$94.1 million in 2024. In 2025, revenue is expected to reach US$140.3 million, an increase of 49% over 2024. "The strong revenue growth is to be driven by the company's owned and operated lighting websites, as well as its key partnerships," McCann noted.
In September 2023, SKYX Platforms filed an application for mandatory safety standardization with the National Electrical Code (NEC) for its ceiling outlet receptacle. "If the application is approved, we believe the company would benefit from a very significant licensing opportunity over the long term," McCann commented. However, the analyst's revenue and adjusted EBITDA forecasts for 2024 and 2025 do not include the prospect of NEC mandatory safety standardization.
As of December 31, SKYX Platforms had US$16.8 million in cash and US$13.7 million in debt, primarily consisting of convertible notes with a 6% interest rate.
"We do not believe the company has any imminent need of additional capital, but it could seek funding to enhance its growth trajectory. Importantly, the company is expected to reach adj. EBITDA breakeven during 2025," McCann stated.
The analyst believes that SKYX Platforms' valuation offers upside potential, with the company's shares trading at 0.5 times enterprise value to the 2025 revenue forecast, well below peers.
"Our price target reflects a target multiple of roughly 3.4 times enterprise value to our 2025 revenue forecast, more in line with peers," McCann explained.
SKYX Platforms' strategic plans include the continued development and commercialization of its smart home technologies, focusing on improving safety in residential and commercial buildings. The company's management team, led by CEO Rani Kohen, has been instrumental in driving innovation and securing key partnerships to support growth.
With a strong patent portfolio, pending NEC approval, and a path to positive cash flow, the analyst believes SKYX Platforms is well-positioned to capitalize on the growing demand for smart home technologies. As the company continues to execute its growth strategy, investors may find significant upside potential in SKYX shares, as reflected in Noble Capital Markets' Outperform rating and US$5.00 price target.
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