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:
- 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.
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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.
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