Fertility Control Demand And Recurring Subscriptions Will Support Strong Long Term Upside

Catalysts

About SenesTech

SenesTech develops fertility control solutions for rodents sold through direct to consumer, business to business and international channels.

What are the underlying business or industry changes driving this perspective?

• Direct control of the Amazon channel and the company website gives better visibility into customer behavior, advertising efficiency and pricing. This can support higher e-commerce conversion and increase revenue and gross profit dollars over time.
• Subscription based sales for Evolve are gaining traction, with recent data showing record subscription revenue and subscriber counts. This can support a more predictable recurring revenue base and improve earnings quality.
• Growing interest from municipalities and professional pest managers, including pilot programs in large urban centers such as New York City and activity in markets like Chicago, Boston and Washington, D.C., expands the use of rodent fertility control solutions. This can lift B2B revenue and improve operating leverage.
• Heightened public awareness of rodent borne disease risks, such as Hantavirus, is driving more inbound inquiries and search activity for rodent control options. This can support demand for SenesTech products and help scale revenue without a proportional increase in marketing spend, aiding net margins.
• Expansion of the Evolve platform with additional rodent control, attractant and repellant products, supported by high gross margin production and a more efficient e-commerce launchpad, can increase average revenue per customer and support gross margin and earnings over time.

Assumptions

How have these above catalysts been quantified?

• This narrative explores a more optimistic perspective on SenesTech compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming SenesTech's revenue will grow by 90.3% annually over the next 3 years.
• The bullish analysts are not forecasting that SenesTech will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate SenesTech's profit margin will increase from -304.2% to the average US Pharmaceuticals industry of 19.7% in 3 years.
• If SenesTech's profit margin were to converge on the industry average, you could expect earnings to reach $3.0 million (and earnings per share of $0.55) by about June 2029, up from -$6.8 million today.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 22.5x on those 2029 earnings, up from -1.3x today. This future PE is greater than the current PE for the US Pharmaceuticals industry at 15.2x.
• The bullish analysts expect the number of shares outstanding to grow by 1.54% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.11%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Direct-to-consumer momentum is currently concentrated in a short period, with April cited as an early proof point. If this uplift proves temporary or customer acquisition costs rise over time, e-commerce and subscription revenue growth could slow and limit overall revenue expansion and earnings potential.
• The company is still investing heavily in SG&A, with Q1 2026 including approximately US$443,000 of onetime expenses on top of an adjusted EBITDA loss of US$1.6 million. If expense reductions and revenue growth do not align, the business may continue to report sizeable losses and pressure net margins and earnings.
• The model relies on recurring subscription behavior and correct product use, yet management highlights the need for much more customer education and expectation setting. If users do not deploy the product effectively or churn is higher over time, recurring revenue and gross profit dollars could fall short of expectations.
• B2B and municipal opportunities, including pilots such as the New York City program and potential brick and mortar rollouts, depend on partner buy in, long sales cycles and broader environmental measures. If municipalities, distributors or large retailers do not adopt or renew programs at scale, B2B revenue growth and operating leverage could be weaker than hoped.
• International expansion is constrained by lengthy and costly regulatory processes that can take 2 to 3 years in some markets and requires local partners to fund or support approvals. If suitable partners are not secured or regulatory timelines extend, international revenue contributions and future earnings could remain limited relative to current expectations.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for SenesTech is $10.0, which represents up to two standard deviations above the consensus price target of $6.75. This valuation is based on what can be assumed as the expectations of SenesTech's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $10.0, and the most bearish reporting a price target of just $3.5.
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $15.4 million, earnings will come to $3.0 million, and it would be trading on a PE ratio of 22.5x, assuming you use a discount rate of 7.1%.
• Given the current share price of $1.65, the analyst price target of $10.0 is 83.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.