Rakon downgraded ahead of earnings
Analyst blames commoditising smartphone market.
Hot Topic
Infrastructure
Deutche Bank has downgraded its earnings estimates for Rakon ahead of the Auckland-based technology company's second half result, scheduled to be reported to the NZX 11am Thursday.
The maker of oscillating crystals used in GPS systems made an ebitda loss $3.5 million and a net loss of $0.26 million in the first-half.
At the time, the company forecast full year ebitda of $14 million and $18 million.
Deutsche Bank now is picking full-year ebitda of $12.9 million, with full-year net profit of $0.21 million (implying second half earnings of $0.47 million will be reported Thursday).
Second half revenue is expected to fall 22% to $73.04 million.
Rakon's product is used in many smartphones, and the smartphone market is booming. However, it is also becoming commoditised, Deutsche Bank warns, pressuring margins.
The company also supplies crystals for GPS gear used in telecommunications networks, but the infrastructure market is slowing.
Deutsche Bank expects Rakon to report weak business in the UK and France, and that its recently opened Chengdu, China operation is still making a loss. The company is expected to be guarded in its 2012 outlook.
Rakon shares have risen over the past three months from an all time low of 42c, but are still well-down on their 52-week high of $1.25 and its high-water mark of close to $6 in the wake of its 2006 IPO.
Deutsche Bank has a hold rating on the stock, and a 12-month target of 53c.
Earlier head of private wealth Mark Lister said, "The world was in a different place when they first listed. The technology doesn't stay your own for very long. This has translated into a steer clear approach amongst investors."
NBR staff
Mon, 14 May 2012
Mon, 14 May 2012
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Rakon downgraded ahead of earnings
20673