Arkados Group OTCBB: AKDS $0.36
Research Note
Industry: Electronics & Engineering
Rating: Speculative Buy (Reiterated)
Price Target: $2.00
By: Robert S. Stoklosa
Arkados Provides Positive Guidance for the February Quarter. Growth Ramp is Underway.
April 13, 2007. Arkados Group (Nasdaq: AKDS) has provided revenue guidance for the February quarter of $60,000. Its growth ramp is well underway as revenues have increased steadily from zero only four quarters ago. An announced backlog of $60,000 implies growth will continue into the current quarter and through the year as the new customers increase and build for the consumer electronics high season in the second half. We reiterate our Speculative Buy rating.
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Amarillo Biosciences Inc. OTCBB: AMAR $0.80
Research Report
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated/Update)
Price Target: $1.90
By: Wayne M. Lottinville, CFA
Amarillo Biosciences Rating Maintained At Speculative Buy; Low-Dose Oral Natural Human Interferon-Alpha As A Safe, Cost-Effective Therapy For Several Diseases
April 16, 2007. Amarillo Biosciences (OTCBB: AMAR) is a biopharmaceutical company developing low-dose oral natural human interferon-alpha as a safe, cost-effective therapy for several diseases or their symptoms, including influenza and HIV-related oral warts. Interferon is known for its antiviral activity and immunomodulating effects. The distinct advantages and characteristics of Amarillo Biosciences' interferon are its oral delivery and safety. Low-dose interferon-alpha is administered orally as a lozenge, which, importantly, is not swallowed, but is allowed to dissolve slowly in the mouth. Scientists believe that this route of oral administration effectively mimics nature, with the interferon attracted by receptors in the oral mucosal surface, stimulating the immune system. Amarillo Biosciences has a Phase 2 clinical investigation using oral low-dose interferon-alpha for Behet's disease and a Phase 2 clinical trial to treat oral warts in HIV-positive patients now underway. The Company has been granted Orphan Drug Designation by the FDA for several of its development programs. Besides orphan drugs, one of the Company's real potential money-makers is using oral interferon for the treatment of influenza. Another potentially large market is using oral interferon to treat chronic obstructive pulmonary disease. The most significant impediment to Amarillo Biosciences' projected progress continues to be financial constraints.
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Amarin Corporation plc Nasdaq: AMRN $3.78
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Strong Speculative Buy (Reiterated)
Price Target: $4.50
By: Stephen L. Handley
Amarin Corporation plc: Encouraging R & D Appointment
April 13, 2007. Amarin Corporation (Nasdaq: AMRN) announced that Declan Doogan, M.D. has been appointed to the newly-created position of President, Research & Development. We are impressed with his background and judge that his acceptance of a position with this small company in effect states his conviction that Amarin's development programs offer great promise. Dr. Doogan joined Pfizer in 1982 and most recently was Senior Vice President and Head of Worldwide Development at Pfizer Global Research & Development,
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American Software Inc Nasdaq: AMSWA $8.95
Research Report
Industry: Computers, Technology & Internet
Rating: Strong Buy (Reiterated/Update)
Price Target: $10.25
By: David P. Soetebier, CFA
American Software Strong Buy Rating In Update Coverage; Raising Price Target To $10.25
April 24, 2007. American Software is a leading supplier of supply chain and enterprise management software. It has an excellent market share position in an area with above-average growth potential. We expect favorable revenue growth for FY 2007 (ending April 2007) and higher operating income, but this will be partially offset by higher reported taxes at Logility, as results are now reported on a fully taxed basis versus being offset by net operating losses (NOLs) in the past. Fiscal 2008 will be the Company's first "normal" year during which earnings won't be negatively impacted by higher taxes and other nonrecurring items. Because of the possible confusion in the reported results, we don't believe the stock price has fairly reflected the Company's growth potential. In addition to providing investors with longer-term growth potential, the shares of American Software have a current cash dividend of $0.08 per quarter, providing a current yield of 3.7%. We have the shares rated Strong Buy with a 12-month target of $10.25 per share. This target price is based on 12 months from now, investors will be looking at April 2009 earnings that we estimate at $0.41 fully diluted. A multiple of 25X our April 2009 estimate gives us a target value of $10.25.
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Baldwin Technology Company Inc AMEX: BLD $5.15
Research Note
Industry: Industrial & Manufacturing
Rating: Buy (Reiterated)
Price Target: $6.85
By: Wayne M. Lottinville, CFA
Baldwin Schedules 3Q07 Earnings Call; Reiterate Buy
April 18, 2007. Baldwin Technology Company (Amex: BLD), will release earnings and hold a conference call for its fiscal 2007 third quarter on Thursday, April 26. For our February 26 update report, we projected that Baldwin will report calendar 2007 earnings of $0.49 per diluted share on its way to earning $0.56 per diluted share in FY08, the first full fiscal year after restructuring and integrating the Oxy-Dry acquisition. For the recently completed fiscal 3Q07, we project that Baldwin will report earnings of $0.11 per share on revenues of $57 million.
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Baldwin Technology Company Inc AMEX: BLD $5.15
Research Note
Industry: Industrial & Manufacturing
Rating: Buy (Reiterated)
Price Target: $6.85
By: Wayne M. Lottinville, CFA
Baldwin Acquires Swiss Hildebrand Systeme; Reiterate Buy
April 12, 2007. Baldwin Technology Company, Inc. (Amex: BLD), has acquired the Swiss division of Hildebrand Systeme GmbH, a company known for its high-performance web and sheet cleaning technology. Baldwin has not disclosed the terms of the deal. In March 2005 Baldwin signed an exclusive worldwide marketing and distribution agreement for Hildebrand's web cleaning systems, which account for an estimated two-thirds of Hildebrand's revenues. Baldwin's CFO said that, "Hildebrand has had vigorous growth with good margins in the last two years." Hildebrand's owner and management team will remain with Baldwin after the acquisition.
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Baseline Oil & Gas Corporation OTCBB: BOGA $0.54
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $2.40
By: Richard R. Wolfe, CFA
Baseline Closes Stephens County, Texas Acquisition, a Milestone for the Company
April 20, 2007. Baseline Oil & Gas (OTC: BOGA) has completed the acquisition of Stephens County, Texas proved producing and proved undeveloped assets (Eliasville Field) in a $28.6 million transaction financed via a revolving credit agreement with a $54.7 million total commitment. The acquisition is a milestone for BOGA, transitioning the Company to operator status, providing an immediate revenue stream ($6.5 million 2006 cash flow), and putting 3.6 million barrels of oil equivalent of proved reserves on the books (estimated by independent engineers).
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Clearant, Inc. OTCBB: CLRI $0.12
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Not Rated (Change)
Price Target: N/A
By: Sally H. Wallick, CFA
Clearant Names Three New Directors.
April 12, 2007. Clearant, Inc. (OTCBB: CLRI) named three new directors, Gaddo L. O. Cardini, Rowland W. Day II, and Michael Elek. All have significant holdings in the Company's shares. Mr. Cardini is a businessman, Mr. Day is a corporate lawyer, and Mr. Elek is a private investor. On April 3, 2007, Clearant reached agreements to issue approximately 89 million shares of common stock at a price of $0.025 per share in private placements with approximately 20 accredited or institutional investors. Also, early in April the Company said that the filing of its 2006 10-K had been delayed due to the Company's limited staff and financial resources, but that it anticipated filing this document no later than the 15th calendar day after the required filing date. If it meets this schedule, the 10-K should be filed some time next week. At that time, we are hopeful that the Company will provide updated information on its direct distribution of CLEARANT PROCESS(R) Sterile Implants and other business strategies. In the meantime, our rating on the shares remains suspended.
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Comarco, Inc Nasdaq: CMRO $7.00
Research Report
Industry: Electronics & Engineering
Rating: Speculative Buy (Initial)
Price Target: $9.00
By: Joe Noel
Comarco Speculative Buy Rating In Initiating Coverage; Products In The Public Safety, Wireless Telecommunications Test, and Computer Mobile Power Markets
April 18, 2007. We are initiating coverage on Comarco Inc. (Nasdaq: CMRO) with a rating of Speculative Buy. While we believe Comarco, with its products in the public safety, wireless telecommunications test, and computer mobile power markets, is a solid well run company that will remain in a state of transition for several more quarters, we believe the long-term growth prospects for the Company are strong. While it likely the Company will experience lower revenues over the short-term due to several transitions that are occurring in all three major business units, we believe the price of Comarco shares has already adjusted for these issues. We believe several new business opportunities are on the near-term horizon for the Company and believe small cap-oriented investors who buy these shares with a six-month time horizon will be rewarded.
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BluePoint Energy Inc. OTCBB: CPEU $3.25
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $5.00
By: Richard W. West, CFA
BluePoint Energy, Inc. Files SEC Form 8-K Detailing Elimination of All Debt; Reiterate Strong Speculative Buy And $5.00 Price Target
April 16, 2007. Chapeau, Inc. dba BluePoint Energy, Inc. (OTCBB:CPEU) announced on December 14, 2006, filing of SEC Form 8-K, detailing elimination of their remaining convertible debt. As of March 29, 2007, the Calim Entities executed a Conversion Acknowledgement Letter in connection with the surrender by the Calim Entities to BluePoint Energy's convertible bonds and notes in the principal amount of $5.3 million. This constitutes the complete conversion of all of BluePoint's outstanding convertible debt into common stock. We reiterate our rating of Strong Speculative Buy and are reiterate our 12-month price target of $5.00 per share.
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CardioVascular BioTherapeutics Inc OTCBB: CVBT $1.12
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Neutral (Reiterated)
By: Richard W. West, CFA
CardioVascular BioTherapeutics Presenting at World Health Care Congress; Neutral Rating Reiterated
April 16, 2007. CardioVascular BioTherapeutics, Inc. (OTCBB:CVBT) will host a panel discussion at the 2007 World Health Care Congress at 10:00 a.m. on Monday, April 23rd at the Washington Convention Center in Washington, D.C. We reiterate the Neutral Rating at this time.
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DXP Enterprises Inc Nasdaq: DXPE $42.80
Research Note
Industry: Industrial & Manufacturing
Rating: Strong Buy (Reiterated)
Price Target: $51.00
By: Paul J. Resnik, CFA
DXP Enterprises to Report 1Q Results on April 24; Estimate 41% EPS Gain; Reiterate Strong Buy Rating
April 19, 2007. DXP Enterprises, Inc. (NasdaqGM: DXPE) announced that it plans to issue a press release reviewing its financial results for the first quarter ended March 31, 2007, at 4:00 P.M. Eastern Time on Tuesday, April 24, 2007 and to host a conference call to be web cast live on the Company's website (www.dxpe.com) at 5:00 P.M. Eastern time that same day. We continue to maintain a 12-month price target of $51 and a rating of Strong Buy for DXP shares.
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Elron Electronic Industries LTD. Nasdaq: ELRN $15.38
Research Note
Industry: Electronics & Engineering
Rating: Strong Buy (Reiterated/Update)
Price Target: $16.00
By: Barry Raeburn
Elron Acquires 19% Stake in Third Emerging Clean Water Technology Company; Adjusting Rating to Buy After Recent Performance Gains
April 19, 2007. Elron (Nasdaq: ELRN) recently announced that it has completed the acquisition of approximately 19% of the outstanding shares of Bio-Pure Technology (BPT) Ltd., an Israeli-based water technology company. This investment of $1.2 million is Elron's third investment in emerging companies within the field of water technologies during the past year. Elron's recent entry into the clean water technology arena is continued evidence of a commitment to identify emerging areas of future growth.With the stock approaching our rating price target of $16.00, we reduce our rating to from Strong Buy to Buy. We maintain a high level of confidence in the growing value of the group companies and make this rating adjustment solely as a function of our ratings system.
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Fushi International, Inc OTCBB: FSIN $10.34
Research Report
Industry: Industrial & Manufacturing
Rating: Speculative Buy (Change)
Price Target: $14.28
By: Stanley Ng
Fushi International Speculative Buy In Update Coverage; 2007 Net Income Forecast At $28 Million in 2007 and $36.8 Million In 2008
April 18, 2007. Fushi International (OTCBB: FSIN) is the largest China-based manufacturer of bimetallic wires, and has benefited from the exponential growth in the consumption of copper-clad aluminum (CCA) wire. The Company's recently announced fourth quarter and full year financial results for 2006 clearly underscored the strong demand for CCA products in the market and management's success in shifting its product mix to produce higher priced, higher margin CCA-magnesium and CCA fine wire products to mitigate the negative impact of falling copper prices on revenue and margins. Meanwhile, the $60 million financing agreement with Citadel Equity Fund secured towards the end of January 2007 should provide the major impetus for the Company to accelerate growth in the coming few years. We forecast Fushi's net income to surge 57% to $28.0 million in 2007 and 31% to $36.8 million in 2008. Diluted EPS will surge 42% to $1.19 in 2007 and rise 31% to $1.56 in 2008. Based on 12x PE for 2007, we have raised our 12-month price target by 22.7% to $14.28 from $11.64 per share. Since the announcement of the $60 million financing arrangement with Citadel Equity Fund on January 29, 2007, share price of Fushi has nearly doubled. With less than 30% upside potential to our new price target, we are revising our recommendation on the stock from Strong Speculative Buy to Speculative Buy.
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FX Energy Nasdaq: FXEN $8.73
Research Report
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Change)
Price Target: $12.50
By: Les W. Childress
FX Energy Upgraded to Strong Speculative Buy Rating in Update Report
April 17, 2007. FX Energy Inc. (Nasdaq: FXEN), which is based in Salt Lake City, has significant acreage in Poland as well as oil production in the United States from legacy reserves acquired in Nevada and Montana. The Company recently reported 100% and 39% increases in revenue for the fourth quarter and year-end 2006, respectively. In addition, the SEC PV-10 value of oil and gas reserves increased 52% to $63.8 million for the same period. Primarily based on our estimate for the current in-ground value of the Company's proven U.S. and Polish reserves plus the in-place reserve potential on a risked basis underlying its remaining oil and gas concessions there, we estimate a current NAV for FX Energy of $28.04 per share. Included in this process is our rough assessment of the initial and current production rates from existing wells in Poland. We are upgrading FX Energy's rating from Speculative Buy to Strong Speculative Buy and raising our 12-month price target from $9.00 to $12.50.
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Green Plains Renewable Energy NasdaqNM: GPRE $22.22
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $58.00
By: Paul J. Resnik, CFA
Green Plains Renewable Energy Announces Planned Departure of CFO; Plant Completion Dates Remain Within Previous Estimate Range; Reiterate Strong Speculative Buy Rating
April 18, 2007. Green Plains Renewable Energy, Inc. (NasdaqCM: GPRE) announced on April 16, 2007 that Brian L. Larson, the Company's Chief Financial Officer, is stepping down from his position as CFO and as an employee of the Company, effective June 8, 2007. Mr. Larson has accepted another employment offer outside of the ethanol sector. His decision to leave Green Plains was described by the Company as "a very amicable exit." Mr. Larson gave Green Plains 90-day notice, and the Company believes this should be long enough for an orderly transition to a new CFO (a search has begun).Although wet weather has created muddy conditions over the past month, we continue to believe the Shenandoah, Iowa plant will begin production in late July and the Superior, Iowa plant will begin production in early January. We are maintaining our Green Plains earnings per share estimates of $0.75 in 2007 and $4.62 in 2008 and reiterate our Strong Speculative Buy rating on the stock.
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Green Plains Renewable Energy NasdaqNM: GPRE $22.22
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $58.00
By: Paul J. Resnik, CFA
Green Plains Renewable Energy Reports February Quarter Results; Derivative Gains and Interest Income Generate Profit; Strong Speculative Buy Reiterated
April 11, 2007. Green Plains Renewable Energy (Nasdaq: GPRE) reported first (February) quarter 2007 results today. The Company posted net income of $777,243. Operating expenses of $853,501 were more than offset by interest income of $456,918 and gains on derivative financial instruments related to corn futures of $1,688,526. Looking forward, the Company states, and we project that Green Plains will incur a significant loss in the May quarter. Assuming that the plant in Shenandoah, Iowa begins operation in July, we believe Green Plains will return to profitability in the August quarter. We continue to expect the Superior, Iowa plant to commence operations in the first fiscal quarter of 2008. Our 2007 and 2008 fiscal year estimates are under review, and we will make adjustments to reflect the profitable February quarter results, the likelihood that most of the Company's interest expense in coming quarters will be capitalized, and the ongoing fluctuations in commodity prices in our next Update report later this month. We continue to rate Green Plains shares a Strong Speculative Buy.
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Harbin Electric, Inc. Nasdaq: HRBN $12.94
Research Note
Industry: Industrial & Manufacturing
Rating: Speculative Buy (Change)
Price Target: $16.02
By: Stanley Ng
Harbin Electric Signs Technology Agreement With Shelton Technology to Expand Capability into Automatic Controllers; Positive Rating Reduced to Speculative Buy on Strong Price Rally in the Past Three Months
April 16, 2007. Harbin Electric, Inc. announced on April 13, 2007 that it has reached an agreement with the U.S.-based Shelton Technology, LLC (Shelton Technology) to jointly design, develop and manufacture custom industrial automation controllers.
Since Harbin Electric successfully transferred its listing from the OTC bulletin board to the more prestigious NASDAQ Global Market in late January this year and its better-than-expected 4Q06 and fiscal year 2006 results were announced in early March, the stock has rallied nearly 70% in the past three months and is now less than 15% below our revised 12-month target price of $16.02. We believe it is prudent to revise our rating from Strong Speculative Buy to Speculative Buy until fresh stimulants emerge.
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InkSure Technologies Inc OTCBB: INKS $2.10
Research Report
Industry: Electronics & Engineering
Rating: Speculative Buy (Reiterated)
Price Target: $3.50
By: Rafael K. Kapelinski
InkSure Technologies Speculative Buy Rating Maintained; We Like The Company's High-Margin Sales Model, The Significant Operating Leverage, And The Market Positioning
April 18, 2007. Following a set of strong InkSure (OTCBB; INKS) 4Q 2006 results, our call on the stock has not changed: the shares are not exactly a value play at EV/Sales 2007E of 8.5x, but the Company does have attractive growth potential and addresses an attractive market with a solution that delivers a very high ROI. Market sources estimate losses from counterfeiting and diversion range from $500 billion to $1 trillion annually, and are increasing at a 20% annual rate. Worldwide, counterfeit goods are thought to represent approximately 6-8% of global trade. Furthermore, existing security technologies such as holograms and watermarks are increasingly counterfeited, generating demand for newer, more effective security solutions. So the bottom line is that we like the Company's high-margin sales model, the significant operating leverage, and the market positioning. The clear negatives are the low visibility of the customer base and a relative high customer concentration. As a result of the strong momentum, and following in-line 4Q 2006 results, we upgrade our 2007E sales forecast from USD 3.62 million to USD 4.14 million (+107% year-on-year). We view our forecast as rather aggressive; however, we believe that the Company's 2007E should benefit from the growing ink sales and some of the pilots with large OEMs turning into commercial orders. We also forecast 2007E EPS of USD (-0.18).
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LJ International Inc. NasdaqNM: JADE $10.94
Research Report
Industry: Consumer & Retail Products
Rating: Speculative Buy (Reiterated)
Price Target: $16.00
By: Sally H. Wallick, CFA
LJ International Maintained At Speculative Buy (Possible Near Term Upgrade) Rating; ENZO Achieved Positive EBITDA
April 17, 2007. LJ International (Naasdaq: JADE) has not yet reported fourth quarter and full year 2006 results. However, in mid February, the Company announced sharply higher revenue and earnings guidance for both periods. It projects fourth quarter revenue of $40 million, up 27% from $31.6 million a year earlier, and diluted earnings of $0.16 per share, 78% above the 2005 fourth quarter's earnings of $0.09 per share. For the full year, its projections are revenue of $123 million, up 30% year over year, and diluted earnings of $0.34 per share versus $0.24 per share in 2005. ENZO achieved positive earnings before interest, depreciation and amortization (EBITDA) for the first time in the fourth quarter of 2006 and appears to be on track to turn profitable some time in 2007. In light of ENZO's better-than-expected 2006 performance, the Company plans to accelerate the chain's expansion. We reiterate our Speculative Buy rating on LJI's shares. Based on our target price and Dutton Associates rating parameters, a rating of Strong Speculative Buy could be justified. However, we are maintaining our Speculative Buy rating for now pending the 2006 earnings report and will review this rating again following that release.
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LJ International Inc. NasdaqNM: JADE $10.94
Research Note
Industry: Consumer & Retail Products
Rating: Speculative Buy (Reiterated)
Price Target: $16.00
By: Sally H. Wallick, CFA
LJ International Inc.: Estimates Updated.
April 15, 2007. LJ International Inc. (Nasdaq: JADE): We are fine-tuning our 2007 earnings estimate for LJ International up slightly from $0.57 to $0.58 per share (versus an estimated $0.34 per share in 2006) and introducing a 2008 estimate of $0.80 per share. We expect the Company's ENZO retail jewelry chain, which operates stores in Mainland China, Hong Kong and Macau, to contribute to year-over-year improvement in 2007 and 2008 revenue and earnings. Although fourth quarter 2006 results have not yet been reported, LJI's management has said that ENZO achieved positive earnings before interest, depreciation and amortization (EBITDA) for the first time in the fourth quarter of 2006 and appears to be on track to turn profitable some time in 2007. Although LJI's management updated fourth quarter and full-year 2006 guidance in February, LJI has not reported 2006 results yet. We expect them to be released in the next one to two weeks. In the meantime, we reiterate our Speculative Buy rating on LJI's shares, based on what we view as the Company's superior near-term and long-term growth prospects.
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Joystar Inc. OTCBB: JYSR $0.83
Research Note
Industry: Leisure & Entertainment
Rating: Neutral (Change)
By: Richard W. West, CFA
Initial Comments on Joystar, Inc. Release of FY2006 Results;Tardy Filing SEC Form 10K Changes Symbol to JYSRE;Reducing Rating to Neutral
April 23, 2007. Joystar, Inc. (OTCBB:JYSRE), a host-based leisure travel agency network and seller of cruises, released its results for FY2006 in a press release dated April 19, 2007. Due to the tardiness of filing its SEC Form 10K, Joystar's symbol has been temporarily changed to JYSRE. We are reducing our rating to Neutral and suspending our estimates for FY2007 at this time.
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Logility Inc. Nasdaq: LGTY $9.20
Research Report
Industry: Computers, Technology & Internet
Rating: Strong Speculative Buy (Reiterated/Update)
Price Target: $13.50
By: David P. Soetebier, CFA
Logility Strong Speculative Buy Rating In Update Coverage; Raising Target Price to $13.50
April 10, 2007. Logility (Nasdaq: LGTY),88% owned by American Software, is a leader in the supply chain management (SCM) software applications business with particular strength in areas dependent on efficient inventory control and distribution. Logility has over 1,100 SCM software clients, compared with an estimated 800 at Manugistics Group (owned by JDA Software) and an estimated 900 at i2 Technologies, its two most important competitors. Logility beat our earnings per share estimate by $0.05 per share for its January 2007 quarter. The positive variable was primarily gross profit margins. Revenues at $11.3 million were $300,000 above our estimate. Gross profits came in at $7.9 million versus our estimate of $7.2 million reflecting a gross profit margin of 69.7% versus our estimate of 66% and gross margins last quarter of 64.5%. Gross profit margins improved in all three-business areas versus three months ago. Because of the stronger quarter versus our estimate, we raised our fiscal 4/2007 EPS estimate to $0.43 (fully diluted) from $0.36 and our fiscal 2008 estimate to $0.54 FD from $0.50. We believe Logility could grow at 25% annually over the intermediate term, which we believe warrants a P/E multiple of 25X earnings. Investors will be focusing on fiscal 2008 earnings estimated at $0.54 giving us a target of $13.50
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Lime Energy Co. OTCBB: LMEC $0.93
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $2.00
By: Richard W. West, CFA
Lime Energy Co. Announces Continuation of HVAC Contract With Major Private Retail Chain;
Strong Speculative Buy Reiterated
April 20, 2007. Lime Energy Co. (OTCBB: LMEC) announced that P.C. Richards & Son, the largest family owned and operated retail electronics chain, has extended their five-year contract with Lime Energy through July 2008. Lime Energy's common stock has been stalled in the $0.83 to $0.95 price range, but we think investors are overlooking that Lime Energy is a "new and different" company. We reiterate our Strong Speculative Buy and $2.00 per share price target.
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Maine & Maritimes Corporation AMEX: MAM $24.95
Research Report
Industry: Oil, Gas & Energy
Rating: Buy (Reiterated)
Price Target: $28.00
By: Sally H. Wallick, CFA
Maine & Maritimes Buy Rating Maintained In Update Coverage; Discount To Book Value And Well Below Average EBITDA Multiple of Other Small-Cap And Mid-Cap Regional Electric Utility Companies.
April 24, 2007. Maine & Maritimes (AMEX: MAM) is a holding company for Maine Public Service Company (MPS), a regulated electric transmission and distribution utility serving much of northern Maine, and The Maricor Group (TMG), an unregulated professional engineering services and solutions firm. In addition, Maine & Maritimes owns 50% of the common stock of Maricor Properties Ltd (MPL). On March 16, in conjunction with reporting fourth quarter and full year 2006 results, Maine & Maritimes announced plans to divest the Company's unregulated operations and refocus solely on the regulated business, MPS. Therefore, beginning in the fourth quarter of 2006, the unregulated businesses were reclassified as discontinued operations. On April 13, Maine & Maritimes divested Maricor Technologies, and said it plans to sell TMG within the next 12 months. Longer term the Company also plans to divest its 50% share of MPL. We expect the Company's earnings per share from continuing operations to increase more than 40% year over year in 2007 to $0.70 per share. We reiterate our Buy rating on Maine & Maritimes common stock, which is trading at a discount to book value per share and at slightly over two times trailing-12-month earnings before interest, taxes, depreciation and amortization (EBITDA), well below an average EBITDA multiple of nearly six times for 15 other small-capitalization and mid-capitalization regional electric utility companies.
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Maine & Maritimes Corporation AMEX: MAM $24.95
Research Note
Industry: Oil, Gas & Energy
Rating: Buy (Reiterated)
Price Target: $28.00
By: Sally H. Wallick, CFA
Maine & Maritimes Corporation: 2008 Estimate Introduced of $1.15 vs 2007E of $.70; Buy Rating Reiterated.
April 22, 2007. Maine & Maritimes Corporation (AMEX: MAM): We are introducing a 2008 diluted earnings estimate for Maine & Maritimes of $1.15 per share. Our 2007 estimate remains $0.70 per share. The main drivers of the projected 2008 year-over-year earnings growth are higher revenue, relatively flat operating expense due to sharply lower unregulated operation and maintenance expense, and lower total interest charges. We reiterate our Buy rating on Maine & Maritimes' shares and our 12-month target price of $28 per share.
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Maine & Maritimes Corporation AMEX: MAM $24.95
Research Note
Industry: Oil, Gas & Energy
Rating: Buy (Reiterated)
Price Target: $28.00
By: Sally H. Wallick, CFA
Maine & Maritimes Corporation 2007 Estimate And Price Target Raised; New Price Target $28; Buy Rating Reiterated.
April 18, 2007. Maine & Maritimes Corporation (AMEX: MAM): We are raising our estimate of Maine & Maritimes' 2007 net earnings from continuing operations from $0.50 per share to $0.70 per share and our target price from $20 per share to $28 per share. This estimate excludes losses from unregulated businesses that are classified as discontinued operations and that we expect to be sold this year. We reiterate our Buy rating on Maine & Maritimes' shares, which are trading at a discount to year-end 2006 book value of $25.35 per share and at slightly over two times trailing-12-month EBITDA, well below the average EBITDA multiple for 16 other regional utility companies of about six times. Also, we view the Company's refocus on its regulated business and plans to divest money-losing unregulated businesses as positive developments with the potential to improve financial performance and enhance shareholder value long term.
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Neurobiological Technologies, Inc. NASDAQ: NTII $2.19
Research Report
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Strong Speculative Buy (Reiterated/Update)
Price Target: $6.00
By: Denise T. Resnik, M.S.
Neurobiological Technologies Strong Speculative Buy Rating Maintained; Phase III Clinical Trials Of Viprinex; For The Treatment Of Acute Ischemic Stroke
April 23, 2007. Neurobiological Technologies (Naasdaq: NTII) continues to attract an increasing level of interest within the healthcare and financial fields. The Company's major research effort is being concentrated on Phase III clinical trials of Viprinex™ for the treatment of acute ischemic stroke, which is believed to have a world-wide market approaching $2 billion. In an effort to maximize the potential of the Viprinex program, the Company appointed Warren W. Wasiewski, M.D., F.A.A.P., as Vice President, Clinical Programs, to lead the clinical development program. Dr. Wasiewski, a board certified pediatric neurologist, was pivotal in the development and execution of AstraZeneca's Phase III clinical studies for acute ischemic stroke. The Viprinex program has been partially funded by two sources of income. The Company sold the rights and assets of Xerecept™ for the treatment of peritumoral brain edema while it continues to sponsor and conduct pivotal Phase III clinical trials. In addition, the Company benefits from an increasing stream of royalties related to sales of Memantine™ for the treatment of Alzheimer's disease. Recently, the Company sold to institutional investors shelf-registered common stock and warrants with net proceeds estimated at approximately $6.6 million. If Viprinex's clinical trials are successful, we believe an eventual market capitalization for Neurobiological Technologies that is a multiple of the current level is reasonable.
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Oragenics Inc AMEX: ONI $1.03
Research Report
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated/Update)
Price Target: $3.75
By: Wayne M. Lottinville, CFA
Oragenics Rating Maintained At Speculative Buy; Development-stage Products Represent Significant Advances In Current Standards Of Treatment
April 13, 2007. Oragenics (AMEX: ONI) is an early-stage biopharmaceutical company with several promising products in its product pipeline which represent significant advances in current standards of treatment. If successfully commercialized, several could result in annual sales in excess of $1 billion. Successful progress in any one of the Company's development programs could add $100 million or more to Oragenics' market capitalization. The most significant impediment to Oragenics' progress is financial constraints. The conclusions of this report assume that Oragenics will obtain the financial backing it needs in the near future. We also assume that Oragenics will achieve its clinical goals within our target time frame. Based on these assumptions, we reiterate our Speculative Buy rating on Oragenics with a 11-month price target of $3.75 per share, which is based on the potential increase in market capitalization cited above. Although our target price suggests a higher rating, the Company first needs to secure better financial footing.
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Online Vacation Center Inc. OTCBB: ONVC $2.50
Research Report
Industry: Leisure & Entertainment
Rating: Speculative Buy (Initial)
Price Target: $3.25
By: Richard W. West, CFA
Online Vacation Speculative Buy Rating In Initiating Coverage; Diversified Supplier Of Travel Services
April 24, 2007. Online Vacation Center (OTCBB: ONVC) is a relatively new Internet-based seller of Vacation Center packages, focusing its marketing efforts on the upscale, mature traveler. From 2000 until March 2006, Online Vacation Center grew to be one of the country's largest sellers of cruise travel, having sold more than $100 million in cruises and vacation packages to a national data base of Online Vacation Center buyers. It became publicly traded in March 2006, when it then began a disciplined acquisition strategy. With these acquisitions, Online Vacation Center has become a diversified supplier of travel services and does not neatly fall into a single category of Internet travel supplier. Rather, Online Vacation Center is a true holding company that, through its subsidiaries, attacks the Internet travel market from several directions. Online Vacation Center's multi-directional business strategy is grounded on Internet-based travel information, personal-based contact travel service through its call center, and home-based travel agents and consumer travel based publications. The recent six acquisitions were purchased for approximately $3.1 million in cash and stock and added approximately $3.8 million in revenue to Online Vacation Center's core business. We estimate that Online Vacation Center's total revenue for FY2007 could increase to $10.0 million, with estimated net income of approximately $280,000, or $0.01 per diluted share.
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PacificHealth Laboratories Inc. OTCBB: PHLI $1.72
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $2.00
By: Jonathan H. Ziegler, CFA
PacificHealth Labs May Be Beneficiary of Cott Corp and Cadbury Schweppes Discussions
April 16, 2007. PacificHealth Laboratories, Inc (OTCBB: PHLI.OB) could conceivably benefit from the potential combination of Cott Corp. and Cadbury Schweppes' (CSAB) beverage operations that is apparently under discussion. Cott has strong distribution into mass merchants and supermarkets where it sells its private label beverages. Such a comibation of operations putatively could faciliate the roll-out of CSAB's specialty beverge distribution. We reiterate our Speculative Buy rating.
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PacificHealth Laboratories Inc. OTCBB: PHLI $1.72
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $2.00
By: Jonathan H. Ziegler, CFA
PacificHealth Laboratories: Update on Cadbury Schweppes Marketing Campaign For ACCELERADE RTD. Putatively Will Be Largest Product launch in the Company's Beverage History With Budget of $50 million Scheduled to Commence May 28th.
April 11, 2007. Pacific Health Laboratories: Today's issue of BrandWeek has a story detailing the launch of a major marketing campagin commencing May 28th for ACCELERADE RTD which it had licensed early last year from PHLI.
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Panhandle Oil and Gas Inc. AMEX: PHX $21.64
Research Note
Industry: Oil, Gas & Energy
Rating: Strong Buy (Reiterated/Update)
Price Target: $30.00
By: Les W. Childress
Panhandle Oil and Gas Announces Significant Increase in Oil and Gas Reserve Estimates from the Woodford Play.
April 13, 2007. Panhandle Oil and Gas Announced Significant Increase In Oil And Gas Reserve Estimates From The Woodford Play
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Patriot Scientific Corp. OTCBB: PTSC $0.56
Research Note
Industry: Electronics & Engineering
Rating: Neutral (Reiterated)
By: Richard W. West, CFA
Patriot Scientific Files SEC 10Q Statement for Three Months and Nine Months Ended 2/28/07;Neutral Rating Reiterated
April 23, 2007. Patriot Scientific Corporation's (OTCBB:PTSC) Q3 SEC Form 10Q details the results and events of the three and nine months ended February 28, 2007. In response to the US Patent and Trade Office (USPTO) recent decision to reexamine Patriot Scientific's co-owned patent (U.S. Patent No. 5,809,336) and the upcoming Markman Hearing on May 3, 2007, we lowered our rating to Neutral on April 3, 2007, and reiterate the Neutral rating at this time.
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Patriot Scientific Corp. OTCBB: PTSC $0.56
Research Note
Industry: Electronics & Engineering
Rating: Neutral (Reiterated)
By: Richard W. West, CFA
Patriot Scientific Patent to be Reexamined by U.S. Patent and Trade Office; Neutral Rating Reiterated
April 17, 2007. Patriot Scientific Corporation's (OTCBB: PTSC) microprocessor U.S. Patent No. 5,809,336 (the '336 Patent) is to be reexamined by the U.S. Patent and Trade Office because of the Public Patent Foundation's submission of prior art that they believe invalidates the patent, and which the Patent Office was not aware of when they issued the '336 Patent. We maintain our Neutral rating at this time.
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Patriot Scientific Corp. OTCBB: PTSC $0.56
Research Note
Industry: Electronics & Engineering
Rating: Neutral (Reiterated)
By: Richard W. West, CFA
Patriot Scientific Announces License for Japanese-Based Manufacturer of Consumer Electronics;
Neutral Rating Reiterated
April 12, 2007. Patriot Scientific Corporation (OTCBB:PTSC) announced that Sharp Corporation purchased a license that gives it the right to use technologies protected by the Moore Microprocessor Patent™ Portfolio (MMP Portfolio). Sharp Corporation is a major producer of LCD TVs, color TVs, TV/VCR combos, LCD projectors, and other electronic products. We reiterate our Neutral rating.
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Provectus Pharmaceuticals Inc OTCBB: PVCT $1.90
Research Report
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Strong Speculative Buy (Reiterated/Update)
Price Target: $3.90
By: Wayne M. Lottinville, CFA
Provectus Pharmaceuticals Rating Maintained At Strong Speculative Buy
April 16, 2007. Provectus Pharmaceuticals (OTCBB: PVCT) is developing drug therapies to treat various cancers and psoriasis. Decades of use have demonstrated that the active agent in Provectus' drug candidates, rose bengal disodium (Rose Bengal), is safe and nontoxic. Several recent reports from Provectus indicate that the Company continues to make good progress with Phase 1 clinical investigations in the treatment of metastatic melanoma and breast cancer. Importantly, significant degrees of tumor ablation have been reported along with the "bystander effect," which is the shrinkage of untreated tumors subsequent to treatment of primary tumors. In addition, Provectus plans to soon begin a Phase 2/3 metastatic melanoma trial, a Phase 1 liver cancer trial, and a Phase 2 psoriasis trial. All of the markets addressed by Provectus' clinical development programs are large and underserved by current therapies. Successful progress in any one of the Company's programs for treatment of cancer or psoriasis could add $200 million or more to Provectus' market capitalization and more than double its stock price to $3.90 per share, our 12-month target price. For these reasons, Provectus is rated a Strong Speculative Buy.
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Raser Technologies Inc. NYSE: RZ $7.60
Research Report
Industry: Industrial & Manufacturing
Rating: Not Rated (Reiterated/Update)
Price Target: N/A
By: Gerald A. Rothstein, CFA
Razor Technologies Update Report Issued; Made Significant Progress; Stock Rose Dramatically On Announcement of the UTX Deal
April 20, 2007. Since our initial report of January 30, 2007, Raser Technologies (NYSE: RZ) has made some significant progress, particularly in terms of developing enough liquidity to simultaneously continue development of its Symetron Technology and to begin the development of some of its geothermal reserves. It has received a contract from the U.S. Army to work on the development of a hybrid powered HumVee using Raser's Symetron technology and has signed contracts with two companies which are testing the Symetron technology for use in alternators and expect to finish their tests, in one case, by the end of June and, in the other, by year end. In the geothermal area, the Company has acquired a number of geothermal reserves and just announced an agreement with United Technologies (UTX-64.90) for the latter to supply Raser with geothermal power systems for three planned Raser geothermal plants. The Company is, of course, still very much a development stage company and, while we are pleased with the developments since we started following it, the key Symetron milestone, in our opinion, will be validation, via production contracts, from a major auto manufacturer or supplier that it believes that Raser's technology is useful, reliable and durable enough to include in its products. For geothermal, we're looking for the development of one or more of its reserves with financing (including, hopefully, monetization) and a power purchase agreement in place. Given the right agreement in one of the two major areas, it wouldn't be necessary for both to be in place for us to recommend the stock. At this point, with no visibility of a revenue stream, we continue to not rate the stock, which rose dramatically on the announcement of the UTX deal.
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Seabridge Gold Inc AMEX: SA $17.67
Research Note
Industry: Metals & Mining
Rating: Strong Buy (Reiterated)
Price Target: $20.00
By: Les W. Childress
Seabridge Gold Continues Resource Expansion; Prompting Price Target Increase To $27
April 17, 2007. Seabridge Gold, Inc. (AMEX: SA) announced continuing resource expansion prompting an increase in the price target to $27.
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SES Solar Inc. OTCBB: SESI $0.67
Research Report
Industry: Industrial & Manufacturing
Rating: Speculative Buy (Reiterated)
Price Target: $2.10
By: Sally H. Wallick, CFA
SES Solar Speculative Buy Rating In Update Coverage; Well Positioned To Benefit From Soaring Demand For Solar Energy In Europe and Worldwide
April 16, 2007. SES Solar (OTCBB: SESI) was formed as a result of a September 27, 2006, reverse acquisition between SES and Societe d'Energie Solaire, a Swiss-based company that researches, develops, produces, and installs solar energy (photovoltaic or PV) products, including PV modules and roof tiles, with a special emphasis on high-quality products that can be architecturally integrated into new or existing structures. We believe that SES is well positioned to benefit from soaring demand for solar energy in Europe and worldwide once it consolidates production in a new plant in Geneva Canton, Switzerland early in 2008. This facility will be fully automated and will incorporate innovative manufacturing techniques, resulting in lower labor costs, higher quality electrical contacts, greater operating efficiencies, and higher production volumes. Management expects to complete the plant by the end of 2007 and to initiate production in the first quarter of 2008. During 2007, we project that SES's revenue will be modest, as the Company focuses on building the new plant and preparing to bring it on stream, and that it will report a small loss for the year. After that, we expect a relatively rapid ramp-up in production volumes, resulting in fast-growing revenue for several years. We believe that SES's share price may be driven in part by the completion of Company-specific milestones in 2007 as discussed in our report. Our current estimate of revenues in 2008 is $18 million.
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Shumate Industries, Inc. OTCBB: SHMT $1.47
Research Report
Industry: Oil, Gas & Energy
Rating: Strong Speculative Buy (Reiterated)
Price Target: $3.00
By: Richard R. Wolfe, CFA
Shumate Strong Speculative Buy Rating In Update Coverage; Target To Be Conservative In Light Of Our Valuation Results
April 20, 2007. Shumate Industries (OTCBB: SHMT) is an oilfield equipment and services company with a stable business base in machining operations and a high-potential, proprietary new technology for valve manufacturing now being commercialized. Our estimates indicate a substantial cash-flow increase over the next three years assuming the new valve technology achieves expected levels of market penetration. Since our previous update report (December 21, 2006), the Company's machining operations have continued to benefit from high levels of drilling activity in the oil and gas industry, making it possible to sustain a price increase. In its fourth quarter of 2006 ended December 31, Shumate's reported revenues of $2.1 million were 12% below our expectations, primarily because of the timing of revenue recognition. We now believe that the new valve technology has progressed sufficiently toward commercialization (in more than one product market) to substantially reduce the speculative element in our projections of the potential revenues from the planned line of two-inch through eight-inch valve sizes. In addition, we have introduced a forecast of DIV sales beginning in 2008 at $4.0 million. We maintain our 12-month price target of $3.00 per share and our Strong Speculative Buy rating. We believe the price target to be conservative in light of our valuation results.
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Sunwin International Neutraceuticals, Inc. OTCBB: SUWN $0.50
Research Note
Industry: Healthcare, Biotechnology & Pharmaceutical
Rating: Speculative Buy (Reiterated)
Price Target: $1.10
By: Stanley Ng
Sunwin Stevia Receives Multiple Purchase Orders for OnlySweet TM;Reiterate Speculative Buy Rating
April 11, 2007. Sunwin Stevia International Announced on April 10 That It Will Start Selling OnlySweet (TM) to US Consumers Through Multiple Grocery Chains in the US
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Seawright Holdings, Inc. OTCBB: SWRI $1.42
Research Note
Industry: Food Manufacturing & Products
Rating: Speculative Buy (Reiterated)
Price Target: $1.00
By: Jonathan H. Ziegler, CFA
Seawright Holdings, Inc. Files its Year-end Numbers and the Results Are Discussed
April 23, 2007. Seawright Holdings, Inc [SWRI.0B] has filed its year-end results with the SEC and the numbers are discussed on a preliminary basis herein. We shall provide more detailed observations, and perhaps a change in our estimates viz $0.03 for 2007, following an update with management.
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Seawright Holdings, Inc. OTCBB: SWRI $1.42
Research Note
Industry: Food Manufacturing & Products
Rating: Speculative Buy (Reiterated)
Price Target: $1.00
By: Jonathan H. Ziegler, CFA
Seawright Springs Announces That Whole Foods Stores in Virgina Will Begin Distributing Its Natural Spring Water Next Month
April 20, 2007. Seawright Holdings, Inc (OTCBB: SWRI) announced that seven Whole Foods stores in Virginia will begin to carry its natural spring water beginning in May 2007. We see this announcement as a natural fit linking a natural spring water company with a natural food retailer.
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Seawright Holdings, Inc. OTCBB: SWRI $1.42
Research Note
Industry: Food Manufacturing & Products
Rating: Speculative Buy (Reiterated)
Price Target: $1.00
By: Jonathan H. Ziegler, CFA
Seawright Springs To Be Among the First Water Companies To Use Biodegradable Bottles
April 16, 2007. Seawright Holdings, Inc. (OTC BB: SWRI) announced that it intends to begin shipping its natural spring water in the first quarter of 2008 using biodegradable bottles.
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Top Image Systems Ltd Nasdaq: TISA $4.05
Research Note
Industry: Software
Rating: Buy (Reiterated)
Price Target: $5.00
By: Rafael K. Kapelinski
Top Image Systems: Acquires CPL, Adjusting Estimates
April 12, 2007. We adjust our estimates following TISA's (Nasdaq: TISA) acquisition of CPL, a UK-based content capture integration specialist. Our new pro-forma 2007E revenue and EPS estimates are USD 27.2 million and USD 0.07 versus USD 23.2 million and USD 0.14 previously. Our new forecast assumes incremental 2007E revenue contribution of USD 4 million and slightly lower margins as PLC, according to the Company, just turned profitable on the operating level in 1Q 2007. Given the fact that CPL's gross margins are higher than TISA's, the prospects for returning to TISA's historic operating margin levels are good, but the timing is still uncertain. We view our EPS estimates as a worst-case scenario and will readjust them as more consolidation details continue to emerge.
Although we lower the 2007E EPS estimate, we believe that the acquisition is a positive as it will potentially strengthen the Company's presence in the UK, and in the US and South Africa in the longer term as well. The acquisition risk is significant, but we believe that the management has dedicated significant resources to making sure that the acquisition is a success. We expect the Company to execute additional acquisitions in the near future.
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Telanetix, Inc. OTCBB: TNXI $7.00
Research Report
Industry: Electronics & Engineering
Rating: Strong Speculative Buy (Reiterated)
Price Target: $8.00
By: Joe Noel
Telanetix Strong Speculative Buy Rating Maintained In Update; Neither Polycom/Tandberg Nor Cisco Systems Is Able To Compete With The Extremely High Quality Of Video And Audio Produced By The Telanetix Product Line
April 10, 2007. As a result of recent acquisitions, improved competitiveness within the market, and what appears to be a very robust pipeline in front of Telanetix (OTCBB: TNXI), we are raising our estimates. Our top-line revenue number for 2007 moves from $8.8 million to $13.2 million and our earnings-per-share estimate moves from $0.16 to $0.18. In our opinion, Telanetix's conferencing products are of very high quality and are likely to be considered by many to be a generation ahead of competitive products. Simply put, the Company offers the best conferencing experience we have seen. We believe the quality of this product is comparable to the quality of the recently announced Cisco Systems product and to HP's high-end conferencing system; however, corporations are able to purchase the Telanetix product at one-fifth to one-third of the price charged by Cisco or HP. This benefit of comparable quality at dramatically lower price points was recently highlighted in one of the major networking and telecommunications industry papers. We strongly believe one of the major players in this market, Cisco Systems, Polycom or Hewlett-Packard, will likely make a move to acquire the Company. We believe neither Polycom nor Cisco Systems is able to compete with the extremely high quality of video and audio produced by the Telanetix product line.
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Vita Food Products, Inc. AMEX: VSF $1.50
Research Report
Industry: Food Manufacturing & Products
Rating: Neutral (Reiterated/Update)
By: Gerald F. LaKarnafeaux, CFA
Vita Food Products Neutral Rating Maintained
April 16, 2007. Vita Food Products (AMEX: VSF) has been providing full year 2006 earnings guidance during the year of a range of $0.21 per share to $0.25 per share compared to a loss of $0.23 per share in 2005. In order to achieve this range the third quarter ending September 30, 2006 earnings had to approximate $0.06 per share versus a loss of $0.07 per share in the comparable 2005 period. The Company reported a disappointing and unexpected loss of $0.15 per share in the September quarter. The Company's seafood products - smoked salmon and herring - have held a leading position in national and regional markets for over seven decades. Vita has a strong distribution structure with its network of approximately 60 retail and institutional brokers and 17 distributor warehouses including three Company owned locations. The poor operating performance from 2003 through 2005 resulted in management changes and a management restructuring in late 2005 and mid 2006. On a more positive note are the operating results, particularly sales results, of the first six months of 2006 while the third quarter was a reversal of the positive trend.
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XAAR Plc LSE: XAR $4.72
Research Report
Industry: Computers, Technology & Internet
Rating: Buy (Reiterated)
Price Target: $6.15
By: Rafael K. Kapelinski
Xaar plc Buy Rating Maintained In Update Coverage; 2007 Should See First Revenues From Gen 2 and Gen 3 Printing Platforms
April 13, 2007. We reiterate our Buy rating on Xaar Plc (LSE: XAR), as we continue to believe that the Company should increasingly emerge as one of the beneficiaries of the ongoing push towards digital inkjet by large imaging OEMs such as Kodak, Fuji, and Agfa. At the same time, our industry sources indicate that sales of wide format digital printers have slowed down somewhat and price reductions by the OEMs have been commonplace. EFI has not posted its 4Q 2006 results, so it is difficult to verify these signals even in a cursory fashion, but we believe the increasing market saturation is beginning to dampen sales. As a result, we do believe that Xaar's mid-term outlook should be defined by the relative success of the Gen 2 and Gen 3 printing platforms on one hand, and negotiations with industry takeover suitors on the other. Xaar's 2H 2006 results were slightly below estimates. Revenues came in at £ 19.9, down 10.7% over 1H 2006, when the Company experienced trading problems in China. Total annual 2006 revenue figure was £ 42.21 million, down 1.3% over 2005. Our new forecast calls for revenues of £45.2 million (+6.9% year-on-year) and EPS of £0.077 versus £50.95 million and £0.011 previously, respectively. Most importantly, in 2007E the Company should see first revenues from Gen 2 and Gen 3 printing platforms.
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Information, opinions or recommendations contained in this research report or research note are submitted solely for advisory and information purposes. The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Such information and the opinions expressed are subject to change without notice. This research report or note is not intended as an offering or a solicitation of an offer to buy or sell the securities mentioned or discussed. Neither the Firm, its principals, nor the assigned analysts own or trade shares of any company covered. The Firm does not accept any equity compensation. Anyone may enroll a company for research coverage, which currently costs US $39,500 prepaid for one-year. Reports are performed on behalf of the public, and are not a service to any company. The analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests and insure independence. Please read full disclosure and other reports and notes on the Company at www.DuttonAssociates.com.
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