Elsight – Finally Delivering On Its Potential

Quite often companies can have great products and technology, suggesting great potential with share prices that boom but without delivering on those expectations the share price comes screaming back to earth. More often than not, they become largely forgotten. One that has come storming back is Elsight (ELS) with a series of contract wins for its Halo product that is opening the door for a serious increase in earnings.

This is a company that has transitioned itself from development to commercialization. And now that it is delivering the share price is also moving in accordance. That can often lead to a significant re-rating.

The Halo product allows for the distribution of real-time data and video across networks with significantly lower use of bandwith to still be able to deliver that content uninterrupted. This is naturally crucial in environments of military, security and health applications. Its specific benefit is in areas where communication networks are underrepresented but key information still needs to be communicated.

The recent contract announcements with Kinetx Prime and Alrena show that health services are significant market for the company and these two contract alone is US$1.9 million with potential for additional orders. This is clearly validation of their technology in the real world and as a result I would expect that more contract wins will be delivered. Furthermore, the lead time to additional contract wins will be shortened as ELS has more devices in use.

These contract wins helped lift the share price from its doldrums in the sub-50c mark up to as high as 73c recently. Currently it is sitting at 60c with a market cap around $63 million. The more exciting aspect is looking at the longer-term profile of the company since it listed with 2017 being the exciting year where its share price rocketed from 20c to $1.75. We know that when ELS hots up it can really motor.

Given the recent move coming off the back of actual delivered contract wins, it won’t take many more wins before the same level of interest and excitement about the earnings potential for its technology returns back to those 2017 levels.

I continue to think that ELS has finally come into to its own, delivering on the potential that the market could clearly see, but was unwilling to wait for. Now that contract wins are coming in relatively quick succession it’s hard not to think that there are more in the near future. ELS had been on my watch list for over 18 months and I had refrained from buying because I wanted to see that validation with contracts. Now it’s here and I am buying. Once 75c is cleared I think there is every potential this is returns to a $100 million + market cap.

About Greg Tolpigin

Greg Tolpigin has over 20 years of experience as a proprietary trader and high-level strategist for the major investment banks including Citigroup, Bankers Trust and Macquarie Bank.

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