Q: Kraken announced a sizeable order today - $34M. The stock has recently sold off a bit but is up 14% today as of this writing. How material is the order? Was it expected? Have they updated their outlook for 2025? Out of 10, how would you rate the stock as a buy? I'm trying to decide whether to make it a full position.
5i Research Answer:
PNG is constantly talking to customers and it is typically a long sales cycle. We cannot say it was 'expected' but following other recent contract wins and guidance certainly some contracts were due. The size was likely larger than expected, but note the $34M is the total from three different customers. It represents about 30% of annual sales, so certainly is significant. We like the stock certainly, with the usual small cap risks to be noted. It is managing growth very well and has started to get momentum with clients. We would rate it as a BUY, with position size to be reflective of its risks.