Wave Energy Deployment And AI Power Demand Will Drive Long Term Upside Potential

Catalysts

About Eco Wave Power Global

Eco Wave Power Global develops and operates onshore wave energy conversion systems to provide reliable renewable electricity from ocean and port infrastructure.

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

• Acceleration of megawatt scale deployment in Portugal, with approximately 90 percent wave availability, should validate near continuous baseload style production. This supports premium pricing for predictable green power and can drive revenue growth and earnings leverage as fixed costs are spread over higher output.
• Global policy and corporate commitments to decarbonize electricity and hard to abate loads such as ports and coastal industries are increasingly favoring diversified renewables. This positions Eco Wave Power as a complementary solution to solar and wind and supports a multi year project pipeline that can expand the top line and stabilize cash flows.
• Rapid execution at the Port of Los Angeles, backed by a co investment agreement with Shell and swift licensing, showcases a replicable model for deploying wave energy in major ports. This can shorten sales cycles, increase project win rates and translate into faster revenue recognition and a path toward improving net margins.
• Targeted reduction in floater production costs and local manufacturing initiatives in markets such as Taiwan are expected to lower the levelized cost of energy. This should improve project economics, enhance bid competitiveness and support a structural uplift in gross margins over time.
• Emerging demand for stable, high density clean power for AI infrastructure, coastal data centers and digital applications creates a new addressable market. In this context, the near continuous output of wave energy can command attractive long term contracts, improving revenue visibility and supporting higher long term earnings potential.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Eco Wave Power Global's revenue will grow by 188.8% annually over the next 3 years.
• Analysts are not forecasting that Eco Wave Power Global will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Eco Wave Power Global's profit margin will increase from -2016.7% to the average US Renewable Energy industry of 12.3% in 3 years.
• If Eco Wave Power Global's profit margin were to converge on the industry average, you could expect earnings to reach $497.9 thousand (and earnings per share of $0.09) by about December 2028, up from $-3.4 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 223.9x on those 2028 earnings, up from -11.2x today. This future PE is greater than the current PE for the US Renewable Energy industry at 51.7x.
• Analysts expect the number of shares outstanding to decline by 0.05% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.04%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Wave energy remains in an early commercialization phase. If pilots in Portugal, the Port of Los Angeles and Asia fail to prove consistent long term performance or reliability, customers may favor more mature renewables such as solar and wind, limiting project wins and constraining revenue growth over time.
• Operating expenses are already rising due to R&D, new hires and global expansion. If cost reductions in floater manufacturing and the levelized cost of energy do not materialize as planned, persistent high opex could prevent operating leverage and keep net margins deeply negative.
• The company is relying on a relatively modest cash balance to fund multiple parallel initiatives across the U.S., Europe, Asia and Africa. If project timelines slip or capital intensity proves higher than expected, Eco Wave Power may need dilutive equity raises or expensive financing that weigh on earnings per share.
• Wave energy is competing for policy support and capital against rapidly scaling solar, wind and storage. If regulatory frameworks, subsidies or corporate decarbonization budgets favor these incumbent technologies, Eco Wave Power could see slower order conversion and weaker long term revenue visibility.
• Demand from AI infrastructure and coastal data centers depends on long term contracts and stringent uptime requirements. If Eco Wave Power cannot demonstrate grid scale stability and bankable performance guarantees, it may miss out on this secular growth segment, limiting upside to both revenue and future earnings.

Valuation

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

• The analysts have a consensus price target of $14.75 for Eco Wave Power Global based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be $4.0 million, earnings will come to $497.9 thousand, and it would be trading on a PE ratio of 223.9x, assuming you use a discount rate of 9.0%.
  
• Given the current share price of $6.5, the analyst price target of $14.75 is 55.9% 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.