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Constituent Review
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J. Andrew Braswell, Equity Analyst
Newbridge Institutional Research
Data as of 3-30-07 |
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Nano
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Review
1/17/07- Announced unaudited revenue for Q4 and full-year 2006 after the close. Total revenue for Q4 was $2.17M (+52% Y/Y), bringing full-year revenue to $9.0M (+32% Y/Y).
2/22/07- Reported Q4 results after the close. Revenue for the quarter was $2.17M (+52% Y/Y), including $2.07M in product sales. The net loss was $1.58M, or $0.08 per share, widening Y/Y from a net loss of $1.4M, or $0.07 per share. The results fell short of estimates for revenue of $2.45M and a net loss of $956K, or $0.05 per share. Of the Q4/06 net loss, $395K, or $0.02 per share, consists of options expense, increased audit and legal fees, and one-time charges for patent write-off. NANX ended the period with $8.57M in cash.
2/27/07- We released an updated report on NANX, maintaining our Hold rating but lowering our price target from $7.50 to $7.00 based on a slower revenue growth projection.
3/26/07- Said that it was issued a U.S. patent titled “Nanostructured Compositions.” The patent describes nanostructured polymer composites containing micro- and nanoscale particles resulting in improved mechanical and optical properties.
Commentary
NANX drifted 1.7% lower in Q1 following a 6% gain in 2006. The stock’s return has mirrored that of the Nasdaq since we initiated coverage last February, supporting the Hold recommendation we have maintained throughout that period. We did lower our target price marginally to reflect a slight reduction in our revenue growth projection for the company going forward. If not for the emergence of Behr as a significant customer, revenue growth would have been all the more disappointing, as BASF grows at a slow-but-steady pace and the other market partners continue to lag expectations. Our estimates for 2007 are for revenue of $12.9M and a net loss of $3.7M, or $0.19. These projections are Street-lows, but barring the emergence of a significant new customer—near-impossible to predict—we see little upside risk. In fact, we think consensus expectations will be lowered to fall more in-line with NANX’s growth trends.
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