is expected to post better financial results in Q2/23 than in Q1/23, reported Echelon Capital Markets analyst Rob Goff in a quarter preview note dated July 31.
We "expect to see improvements in Q2/23" after a tough Q1/23, during which some revenues were delayed and others were lost due to headwinds, Goff wrote. "We note the company's prior reference to a robust sales pipeline where we are optimistic that it will secure significant wins."
Projected Return of 283%
As such, Echelon maintained its Q2/23 forecasts and its CA$0.90 per share target price on Volatus, currently trading at about CA$0.24 per share.
The difference between these prices implies a material return for investors of 283%.
Volatus remains a Speculative Buy.
Original Guidance Unchanged
What bodes well for Volatus in Q2/23 and H2/23, wrote Goff, is that management, post Q1/23, reiterated its previously stated guidance for full-year 2023: US$52 million (US$52M) in revenue and US$16.6M of gross profit with a 32% margin.
"In 2023, Volatus expects to generate US$10–12M in recurring revenue from oil and gas contracts compared to US$9M in 2022," Goff added.
Management expects to achieve these numbers thanks to the company's large, outstanding requests for proposals (RFPs), increased military sales, and the capacity to commercially leverage some of its technologies.
Also, Volatus has been tackling and trying to work around the various headwinds it faced in Q1/23. Echelon would like to see confirmation, in Volatus' Q2/23 results, that the drone solutions firm has had some success in this regard.
Managing the Headwinds
Goff provided updates on the factors that affected Volatus' revenue in Q1/23. They are:
1) Severe weather and wildfires in Alberta and British Columbia thwarting weekly inspections.
After obtaining approval, Volatus completed its first mission in July, helping wildfire suppression agencies in Western Canada.
"The company looks to add between US$1M and US$1.2M in inspection revenues in June and July with a greater impact likely to be seen with the Q3/23 results," Goff wrote.
2) Delays in executing oil and gas contracts due to fires and the slow start of the Canadian flying season.
Management indicated it has multiple recurring contracts between US$12M and US$15M in 2023 that, together with its robust pipeline, support the full-year revenue guidance. Echelon wants an update on the sales pipeline in the Q2/23 results. Plus, the Canadian drone company has several RFPs in its sales funnel that could increase Q4/23 revenues.
3) Delays in meeting equipment demand in Ukraine.
Thanks to its newly acquired product, the iRed Remote Sensing, Volatus expanded its presence in the United Kingdom.
4) Delays in building inventory.
Volatus has subsequently bolstered inventory to support greater product sales through Q2/23.
|Want to be the first to know about interesting Technology investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter.||Subscribe|
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Volatus Aerospace Corp.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
For additional disclosures, please click here.
Disclosures for Echelon Capital Markets, Volatus Aerospace Corp., July 31, 2023
Echelon Wealth Partners Inc. is a member of IIROC and CIPF. The documents on this website have been prepared for the viewer only as an example of strategy consistent with our recommendations; it is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular investing strategy. Any opinions or recommendations expressed herein do not necessarily reflect those of Echelon Wealth Partners Inc. Echelon Wealth Partners Inc. cannot accept any trading instructions via e-mail as the timely receipt of e-mail messages, or their integrity over the Internet, cannot be guaranteed. Dividend yields change as stock prices change, and companies may change or cancel dividend payments in the future. All securities involve varying amounts of risk, and their values will fluctuate, and the fluctuation of foreign currency exchange rates will also impact your investment returns if measured in Canadian Dollars. Past performance does not guarantee future returns, investments may increase or decrease in value and you may lose money. Data from various sources were used in the preparation of these documents; the information is believed but in no way warranted to be reliable, accurate and appropriate. Echelon Wealth Partners Inc. employees may buy and sell shares of the companies that are recommended for their own accounts and for the accounts of other clients. Echelon Wealth Partners compensates its Research Analysts from a variety of sources. The Research Department is a cost centre and is funded by the business activities of Echelon Wealth Partners including, Institutional Equity Sales and Trading, Retail Sales and Corporate and Investment Banking.
Research Dissemination Policy: All final research reports are disseminated to existing and potential clients of Echelon Wealth Partners Inc. simultaneously in electronic form. Hard copies will be disseminated to any client that has requested to be on the distribution list of Echelon Wealth Partners Inc. Clients may also receive Echelon Wealth Partners Inc. research via third party vendors. To receive Echelon Wealth Partners Inc. research reports, please contact your Registered Representative. Reproduction of any research report in whole or in part without permission is prohibited.
Canadian Disclosures: To make further inquiry related to this report, Canadian residents should contact their Echelon Wealth Partners professional representative. To effect any transaction, Canadian residents should contact their Echelon Wealth Partners Investment advisor.
U.S. Disclosures: This research report was prepared by Echelon Wealth Partners Inc., a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein. Echelon Wealth Partners Inc. is not registered as a broker-dealer in the United States and is not be subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. For U.S. persons only: This research report is a product of Echelon Wealth Partners Inc, under Marco Polo Securities 15a-6 chaperone service, which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account. Research reports are intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a-6(a)(2). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not the Major Institutional Investor. In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional Investors, Echelon Wealth Partners Inc. has entered into a chaperoning agreement with a U.S. registered broker-dealer, Marco Polo Securities Inc. ("Marco Polo"). Transactions in securities discussed in this research report should be effected through Marco Polo or another U.S. registered broker dealer.
U.K. Disclosures: This research report was prepared by Echelon Wealth Partners Inc., a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. ECHELON WEALTH PARTNERS INC. IS NOT SUBJECT TO U.K. RULES WITH REGARD TO THE PREPARATION OF RESEARCH REPORTS AND THE INDEPENDENCE OF ANALYSTS. The contents hereof are intended solely for the use of, and may only be issued or passed onto persons described in part VI of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001. This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein.
Copyright: This report may not be reproduced in whole or in part, or further distributed or published or referred to in any manner whatsoever, nor may the information, opinions or conclusions contained in it be referred to without in each case the prior express written consent of Echelon Wealth Partners.
ANALYST CERTIFICATION Company: Volatus Aerospace Corp.| VOL-TSX I, Rob Goff, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report.
During the last 12 months, Echelon Wealth Partners Inc. provided financial advice to and/or, either on its own or as a syndicate member, participated in a public offering, or private placement of securities of this issuer.
During the last 12 months, Echelon Wealth Partners Inc. received compensation for having provided investment banking or related services to this Issuer.