In a March 9 research note, analyst Michael Shlisky reported that Colliers Securities initiated coverage on Crown ElectroKinetics Corp. (CRKN:NASDAQ) with a Buy rating and a $12 per share target price. Crown's current share price is about $4.85.
"Now is finally time for investors to take a look at Crown ElectroKinetics," he added.
Since its founding in 2015, the company spent years on research and development, acquired the technology behind its product from Hewlett Packard and raised about $20 million while uplisting to the NASDAQ. Now, it is ready to commercialize its DynamicTint, Shlisky explained. The Oregon-headquartered firm will target the smaller residential market first and then, likely sometime next year, go after the sizable commercial market.
"We believe [commercial] is where the real opportunity lies: the ability to save up to 32% on energy costs thanks to reduced HVAC and lighting usage," noted Shlisky.
He presented the key points of this story.
One is that the technology behind DynamicTint is "superior" to those of similar products in the smart glass market. Crown's product changes the shade of glass to actual gray, black or any specified color in just seconds whereas others turn to various blue shades and take several minutes to do so. Also, DynamicTint uses less energy, does not need connecting to the building's electrical system and can be used to retrofit existing glass. The latter affords Crown a much larger available market.
"This is a game changer with substantial customer appeal, at a lower upfront cost and energy cost than alternatives," wrote Shlisky. "Net, Crown could end up disrupting the disrupters in the smart-glass sector."
Two, Crown's business model lends itself to low capital and high margins, Shlisky highlighted. This is because Crown plans to outsource manufacturing and assembling or license its technology as DynamicTint can be inserted into existing glass. The economics behind retrofitting are compelling but even more so for new construction.
Finally, Crown is a true ESG (environmental, social and governmental) stock, given the energy efficiency and personal wellbeing benefits generated by DynamicTint, the analyst noted.
Looking forward, Colliers expects revenue for Crown to gain momentum in the second half of the fiscal year starting April 1, 2021. It estimates Crown, in FY22, will generate $10 million in revenue and in FY23, break even on adjusted EBITDA and garner $55 million in revenue. Colliers expects Crown will turn cash flow positive before using up its current $20 million.
Shlisky concluded the report by writing that DynamicTint "is a 'no-brainer' for most buildings once full commercial availability is achieved. We feel similarly about its applications for residences and automobile glass."
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