Poet Technologies Inc (POET)

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Zacks POET PRESENT VALUE $1.80 (Updated 8/31/2020)

Given its unique product offering and large TAM we believe POET shares are worth $1.80 based on peer multiples given no further equity dilution than forecast.

POET s business model would make it similar to fabless semiconductor companies. Third parties would provide the production of its devices and we expect it would have margins similar to those companies below. They trade at an average of 8.1xs enterprise value to estimated 2021 revenues. Currently POET trades at an enterprise value of $115 million using a fully diluted share count. We need to look further out to where we think revenues would be by 2025. If we say the joint venture is able to reach $200 million in revenues by then and the rest of the business can ramp to $100 million that would be $200 million in revenues for POET in 2025. Using 8.1xs gives us an enterprise valuation of $1.62 billion, a market value of $1.63 billion or $5.10 per share by 2024 using today s fully diluted share count. This would be a present value of $1.80 per share discounted by 30% per year.

https://s1.q4cdn.com/460208960/files/News/2020/Zacks_SCR_Research_08312020_POETF_Thompson.pdf

POET has completed four product designs for three different potential customers. The first to go into production is expected to be the one for the about-to-close joint venture. Two of these designs are in the alpha stage and the company has sent samples to these customers and is now beginning to establish the production process and will be scaling up volume in the joint venture. In its labs in Pennsylvania and Singapore, engineers are testing devices and collecting data to demonstrate performance of the end product to customer specifications. Once the production process is established the devices will move into the beta stage, during which additional refinements will be completed.