Robust Outlook for Tecogen Justifies Price Target Increase

Tecogen Inc. (US: TGEN – $3.96 & GER: 2T1 – €3.25) designs, manufactures and sells industrial and commercial CHP (Combined Heat & Power), or cogeneration, systems that produce combinations of electricity, hot water, and air conditioning. It’s a well-established Company that has already shipped over 3,000 units, some of which have been operating for more than 35 years.

A new sales record for Tecochill chillers was achieved during 2018 as a result of the expansion for cannabis cultivation facilities. Considering the expectation for additional capacity to be added to supply these markets, plus the anticipation that cannabis legalization will be approved in several other states, even stronger sales growth lies ahead for Tecogen.

The major contract announcements the past months also validated the advanced technology of the product line that created specific advantages for each client. The Tecogen systems provide operational flexibility, in addition to reliability and lower pollution emissions. All these factors contributed to the choice for each new client to upgrade to Tecogen products, instead of other options that were considered.

As the stock price remains fairly steady, existing shareholders can view the fourth quarter financial statements as one step closer to Tecogen achieving its goal of consistently profitable revenue growth. This makes it a prime candidate for a major run towards our target price on positive news or demonstrated profitability. We believe that this is possible in 2019 as sales backlog transforms into more record revenue numbers and profitability on subsequent quarterly results.

We reiterate our buy recommendation for Tecogen Inc. with a target price of $9.53, which is 140% above today’s stock price.

Download the fourth quarter 2018 Tecogen Inc. Company Report. Advice: BuyPrice Target: $9.41Latest Company Report (pdf)
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