NXT Energy Solutions Inc. (NSFDF)

[JSTIC]

Mackie Research Increases Target ($2.50) on NXT Energy Solutions on US$13m Award

http://www.resourcereports.com/mackie-research-increases-nxt-energy-bid-after-news-outs-on-us13m-contract/

SFD™ Contract Will ‘Bring 80% Gross Margin Quickly’

Top Canadian investment firm Mackie Research Capital reiterated its “BUY” rating for NXT Energy Solutions Inc. (SFD:TSX.v, NSFDF:OTCBB), and revised their target 31% to $2.50 from $1.90/sh.

NXT shares surged on Thursday after the company announced a new contract worth in excess of US$13 m to conduct a survey using it’s patented Stress Field Detection technology (SFD™). The tech acts as a modern, low-cost, low-environmental footprint; layer of locating prospective trapped oil and gas fluids.

Mackie points out that the US$13 m contract should yield revenue quickly, anticipating surveying to begin between Q2-Q3 this year. Based on previous contracts, this is expected to net as much as 80% gross margin.

Commenting on the news of the contract today, Mackie Research’s Raveel Afzaal, Industrial Technologies Analyst spoke to Resource Reports:

This is the largest contract that the Company has been awarded to date. We believe that this contract will further raise NXT’s profile in the O&G community, allowing it to secure additional large contracts.
Previously, Mackie Research put out a buy rating of $1.90/sh and $1.70 before that. Thursday’s news garnered a new price at $2.50.

They continue to use 11.5x P/E multiple to calculate the target price, but note that that’s a conservative estimate, and other oil and gas companies can trade between 20.0x to 30.0x P/E multiples.

NXT Energy Solutions (TSX.V:SFD, OTCBB:NSFDF, NASDAQ:NSFDF) in mid day trading is hit $2.40 per share, and closed at a five-year high of $2.05.