Raymond James Raymond James analyst Steve Hansen sees EnWave Corp. poised to make further inroads into the cannabis sector with its Radiant Energy Vacuum technology.
On Thursday, the Vancouver-based company announced a royalty-bearing commercial license agreement with a second large U.S. cannabis multi-state operator. The MSO also purchased a large-scale 120- kilowatt Radiant Energy Vacuum machine, which is used for the dehydration of organic materials, for its cultivation facility.
“We view this latest news as further validation that EnWave’s proprietary REV technology and associated Terpene Max drying protocol are poised to gain further adoption across the U.S. cannabis sector,” said Mr. Hansen. “Prior to committing to the technology, we note this latest MSO reportedly conducted extensive benchmarking trials across multiple strains in order validate REV’s advantages over incumbent drying methods, ultimately proving out improved terpene and cannabinoid retention. As news of this commercial commitment spreads, we can only surmise that other major MSOs will likely want to follow in some fashion. At the same time, we see an opportunity for ENW to sell additional machines/capacity into these first two large MSOs as they become increasingly comfortable with the technology.”
Mr. Hansen thinks the latest order is “another solid stride toward management’s FY2021 target to sell 10 small-scale and 5 largescale REV machines.”
He reiterated an “outperform” rating for its shares without a specified target. The average on the Street is $1.53.
“This latest news only reinforces our constructive thesis and broader excitement about having both sides of the ENW platform firing at the same time,” he said. “Supporting this view, we continue to see several positive catalysts on the horizon, including: 1) accelerating REV machine sales across multiple industries (cannabis, food, pharma); 2) additional new business/sales wins at the company’s NutraDried division (grocers, retailers, third-party bulk); and 3) the near-term commissioning of its REVworx division.”