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On the heels of a fourth quarter print from Energous Corp (NASDAQ:WATT) last Thursday, Roth Capital analyst William Gibson is chiming in on what he deems a “defining year” for the industrial company.
Calling for big product, revenue, and profit ramp to hit next year, the analyst reiterates a Buy rating on WATT stock with a $45.80 price target, which implies a close to 130% upside from where the shares last closed. (To watch Gibson’s track record, click here)
For the fourth quarter, WATT forfeited $11.2 million or ($0.50) per share on revenue of merely $29,000. By comparison, Gibson had been angling for a loss of $13.4 million or ($0.61) per share on revenue of $30,000. “The company did a good job of cutting costs and operating expenses were only $11.3 million compared to our $13.1 million estimate,” notes the analyst.
The company’s fourth quarter cash losses add up to $7.6 million, leaving WATT closing out 2017 with $12.8 million on its balance sheet. With $39 million raised via net proceeds last month in an at the market transaction, Gibson bets WATT has sufficient capital to begin to bring free cash flow to the table next year.
WATT’s milestones for last year point to a FCC certification for Near Field and Mid Field transmitters alike; various new and enhanced integrated circuits, including the likes of critical power amplifying along with beamforming chips; and better fully integrated transmitters to bolster the 900 MHz frequency band coupled with the legacy 5.86 GHz band.
Worthy of note, UK-based chip maker Dialog Semiconductor has shelled out a $25 million investment in WATT on top of steering the supply chain, which includes inventory, and marketing every one of the firm’s chips. Presently, the analyst draws attention to more than 70 companies in different stages of product evaluation as well as integration.
“Products are expected to begin shipping to consumers early this year. Energous is focused on a handful of customers with a quick time to market to validate the technology and FCC approval process. It is also concentrating its efforts on a limited number of customers capable of introducing products with high volumes for later in 2018, including the first products utilizing the Mid Field WattUp transmitter. We expect a significant product, revenue and profit ramp in 2019 including products utilizing the Far Field (up to 15 feet) transmitter,” highlights Gibson.
With this timeline in mind, the analyst has delayed his product ramp one quarter this year, forecasting a close to $37 million loss or ($1.47) per share on revenue of $11.7 million. Gibson’s cash loss projection circles $25 million.
On a final bullish note, “The company reports its strategic relationship with its Tier One consumer electronics partner is sound and continues to move forward,” surmises Gibson, likewise pinpointing a nonexclusive alliance with a second Top Tier electronics product player. The industrial company anticipates the company can “products utilizing WattUp technology later in 2018,” explains the analyst.
TipRanks showcases positive initial early word on this industrial player, with 2 out of 3 analysts polled in the last 3 months rating a Buy on WATT stock and just 1 maintaining a Hold. Consider that the 12-month average price target stands at $45.80, boasting a whopping nearly 130% in upside potential from where the shares last closed.