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SKYX Platforms Corp. may have a lot of upside related to pending approval by the National Electrical Code (NEC) for mandatory standardization of the SKYX receptacle, representing a "holy grail" breakout case that would accelerate market adoption and drive significant upside, according to a Maxim Group research note.

Maxim Group analyst Jack Vander Aarde initiated coverage on SKYX Platforms Corp. (SKYX:NASDAQ) with a Buy rating and a 12-month price target of US$3.00, according to a research report published on April 26, 2024. The analyst believes that SKYX is on the cusp of transforming from a traditional online lighting business into a high-growth smart home and plug-and-play platform provider, with a bright future ahead.

"SKYX's 90+ patents and a suite of next-gen products centered on its universal electrical ceiling receptacle improves ease of use and safety for homes and commercial buildings," Vander Aarde stated. "The company is rapidly expanding its go-to-market channels to accelerate market penetration of its next-gen products, including 1) e-commerce channels; 2) strategic partnerships; 3) builder agreements; and 4) licensing deals."

The analyst highlighted SKYX's April 2023 acquisition of Belami, which brought in an established lighting conglomerate that sells 100,000+ third-party SKUs across 60+ owned websites.

"SKYX also recently announced a 5-year master agreement with General Electric (GE - NR) and collaborations with Golden Lighting, Kichler, Quoizel, and Ruee Appliances," Vander Aarde noted.

SKYX is currently working on integrating its smart technologies with third-party SKUs across its e-commerce sites. The analysts believes this will add significant cross-selling synergies for its gen-1 Sky Plug & Receptacle (US$50 ASP), gen-2 Smart Plug (US$140 ASP), and upcoming gen-3 SKY Smart Platform (higher ASP, robust smart features).

Vander Aarde emphasized the potential upside scenario related to pending approval by the National Electrical Code (NEC) for mandatory standardization of the SKYX receptacle, representing a "holy grail" breakout case that would accelerate market adoption and drive significant upside relative to Maxim Group's long-term estimates.

"The U.S. represents a potential US$500B+ TAM. According to Straits Research, the global lighting fixtures TAM was US$132.4B in 2023 and forecast to grow 4.3% through 2032," Vander Aarde stated. "Management estimates its U.S. TAM is US$500B+ based on ~130M U.S. homes, ~30 ceiling outlets per home, and a ~US$140 average selling price (ASP)."

Maxim Group currently forecasts US$400M+ revenue for SKYX by 2030, which assumes a ~5% penetration of U.S. households alone and excludes the potential "holy grail" NEC mandate and commercial opportunities, each representing significant upside to the firm's forecasts.

The analyst projects strong multi-year growth for SKYX, with 2024E revenue of US$82.0M, up 39% year-over-year, and 2025E revenue of US$109.0M, up 33% year-over-year. Vander Aarde expects SKYX to achieve positive adjusted EBITDA by 4Q25, with an adjusted EBITDA loss of (US$22.9M) in 2024, improving to (US$8.0M) in 2025.

"SKYX currently trades at a 2025 EV/revenue multiple of 0.7x vs. peers (Figure 16) with market caps under US$300M trading at an average of 2.4x. Our 12-month DCF-based price target of US$3.00 represents a CY25 EV/revenue multiple of 2.8x, which is a premium to peers, but we view as justified given the company's strong innovative IP and significant TAM opportunity," Vander Aarde explained.

With a closing price of US$0.83 on April 25, 2024, Maxim Group's price target of US$3.00 represents a significant potential upside for investors.

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Important Disclosures:

  1. SKYX Platforms Corp. has a two-year consulting relationship with Street Smart, an affiliate of Streetwise Reports, and pays US$84,000 per year in stock for such services.
  2.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

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Disclosures for Maxim Group, SKYX Platforms Corp., April 26, 2024

I, Jack Vander Aarde, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report. The research analyst(s) primarily responsible for the preparation of this research report have received compensation based upon various factors, including the firm’s total revenues, a portion of which is generated by investment banking activities.

Maxim Group makes a market in SKYX Platforms Corp. Maxim Group expects to receive or intends to seek compensation for investment banking services from SKYX Platforms Corp. in the next 3 months.

SKYX: We use the NASDAQ (IXIC) as the relevant index for SKYX. Valuation Methods SKYX: Our valuation methodology is based on a Long-Term DCF analysis and further supported by forward EV/revenue multiples that considers related peer group company trading multiples. Price Target and Investment Risks SKYX: Aside from general market and other economic risks, risks particular to our price target and rating for SKYX Platforms Corp. include: 1) Competition risk. The company competes with major domestic and international companies, some of which may have greater market recognition or greater financial, technical, marketing, and other resources. Existing competitors or new entrants may offer better solutions, which could adversely affect the company’s business. 2) Access to capital and dilution risk. The company may require additional capital in the future to execute its long-term strategic plan to further develop its business. Any future capital raises would likely result in dilution of ownership to existing shareholders. If the company fails to generate or obtain the financial resources needed, the company’s business, operating results, and financial condition could be adversely impacted; and the business may need to cease operations. 3) Credit risk. The company is exposed to credit risk resulting from the possibility that counter parties could default on their financial obligations to the company. 4) Acquisition integration risk. The company has and may continue to make acquisitions or make investments in businesses, technologies, or products, to expand the business. There can be no assurance that the company will be able to identify suitable candidates or consummate these transactions on favorable terms. Further, there is no assurance that the integration of these acquisitions will prove successful. 5) Future business success is uncertain. The company expects to commit significant financial resources toward marketing, product development, and research. There is no assurance that the company can effectively evolve with its developing market, use leading third-party technologies effectively, or respond to advances in data collection and cataloging successfully. 6) Global company risk. SKYX is an American company but has operations globally. The company may experience foreign exchange fluctuation, changes related to foreign government policies and legislation, and many other potential factors due to its international exposure that may adversely affect the company. 7) Licensing agreement risk. The company has global trademarks and global licensing and master service agreements with third parties. The loss or termination of the arrangement could adversely affect the company’s business. 8) Intellectual property and patent infringement risk. The company has a specific brand, patented technologies and various IP tied to its operations. There is a potential risk of brand infringement, counterfeiting, and other unauthorized intellectual property right infringements on its proprietary technology. 9) Technology incompatibility risk. Part of the company’s core strategy relies on its products having interoperability with third-party IoT products and protocols. If the company is unable to seamlessly integrate their products its business may be adversely affected. 10) Personnel risk. The company relies on the services of key personnel and consultants. There is a risk of being unable to attract or retain the necessary technical and management personnel, which could have an adverse effect on the business. 11) Third-party reliance risk. The company will continue to depend on relationships with third parties, such as its China based manufacturers, to operate parts of its business and manufacture its products. If there are any operational failures, or disruptions to these arrangements, SKYX’s business could be adversely affected.

DISCLAIMERS Some companies that Maxim Group LLC follows are emerging growth companies whose securities typically involve a higher degree of risk and more volatility than the securities of more established companies. The securities discussed in Maxim Group LLC research reports may not be suitable for some investors. Investors must make their own determination as to the appropriateness of an investment in any securities referred to herein, based on their specific investment objectives, financial status and risk tolerance. This communication is neither an offer to sell nor a solicitation of an offer to buy any securities mentioned herein. This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or disclosed to another party, without the prior written consent of Maxim Group, LLC (“Maxim”). Information and opinions presented in this report have been obtained or derived from sources believed by Maxim to be reliable, but Maxim makes no representation as to their accuracy or completeness. The aforementioned sentence does not apply to the disclosures required by FINRA Rule 2241. Maxim accepts no liability for loss arising from the use of the material presented in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Maxim. This report is not to be relied upon in substitution for the exercise of independent judgment. Maxim may have issued, and may in the future issue, other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. Those reports reflect the different assumptions, views and analytical methods of the analysts who prepared them and Maxim is under no obligation to ensure that such other reports are brought to the attention of any recipient of this report. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Information, opinions and estimates contained in this report reflect a judgment at its original date of publication by Maxim and are subject to change without notice. The price, value of and income from any of the securities mentioned in this report can fall as well as rise. The value of securities is subject to exchange rate fluctuation that may have a positive or adverse effect on the price or income of such securities. Investors in securities such as ADRs, the values of which are influenced by currency volatility, effectively assume this risk. Securities recommended, offered or sold by Maxim: (1) are not insured by the Federal Deposit Insurance Company; (2) are not deposits or other obligations of any insured depository institution; and (3) are subject to investment risks, including the possible loss of principal invested. Indeed, in the case of some investments, the potential losses may exceed the amount of initial investment and, in such circumstances, you may be required to pay more money to support these losses.


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