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Energous Corporation - Initiation Note

Energous Corporation

BUY (WATT, $8.27)

Cutting The Charging Cord–Initiating With A BUY Rating & 28 Price Target

May 20, 2015

Ilya Grozovsky

212.417.8219

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Investment Conclusion. We are initiating coverage of Energous (WATT) with a BUY rating and $28 price target. In our view, this development stage company is poised to bring wireless charging to fruition and revolutionize the way people charge their mobile devices. To date, wireless charging has meant laying a device on a pad or having contact with a charger but Energous’ technology will give users a range of 15 feet from the transmitter thereby allowing for true mobility and increased utility. We believe that the path that the company needs to travel to get to commercialization is not an easy one but we believe that it has a significant lead on any competition and has signed an agreement with an unnamed Tier One Company in the consumer products area, which should provide the company with the necessary tools to bring WattUp to reality. We believe that Energous’ financial model of licensing its technology is very attractive and highly profitable once it is at full scale. We believe that significant revenues will begin in 2018, prior to that we believe that the company will be ramping product development and receive some milestone payments. Given the early stage of the company, we believe the most appropriate valuation methodology is a Discounted Cash flow (DCF) with a severe 60% discount rate (to account for the company’s early stage and risks). Nevertheless, even adjusting for these factors, our DCF valuation yields a $28 price target on the shares and as such delivers a BUY rating.

WATTSource: Company Reports, National Securities Corporation Estimates

Company Profile

Energous Corp., founded in 2012 and headquartered in San Jose, California, is a development stage company. The Company is developing a technology that enables wire-free charging of electronic devices at a distance and with complete mobility. The Company’s solutions enable wire-free transmission of energy from a transmitter to multiple receivers connected to or integrated into electronic devices, at distances of up to 15 feet. It has developed a prototype system consisting of a base station transmitter, a smart phone receiver case, receiver test boards and management software...


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