Canadian broker Mackie Research has had a chat with the management of Spectra7 Microsystems Inc (TSE:SEV), after the high-speed connectivity specialist released its 2015 results, and sees no reason to change its 'speculative buy' rating.
Revenue was down 24% to US$4.2mln in 2015 from US$5.6mln the year before as the company phased out some old products and introduced new ones.
Despite product line transitions, the gross margin remained strong at 60% for 2015, albeit down from 75% the year before, with the fourth quarter seeing a slump in the gross margin to 46%.
Mackie described the fourth quarter results as “a non-event”, though it has trimmed its estimate for virtual reality (VR) and augmented reality (AR) headsets for this year and next.
Making the transition to new products is a fact of life in the sector in which Spectra7 (SEV) operates, and in fact the next few weeks could be very exciting for Spectra7, Mackie reckons, if industry “tear downs” show Spectra7 chips in consumer VR headsets.
A “tear down” is where a review site gets its hands on a new product and rips it apart in an attempt to discern which components were used in its construction.
“Customers should start receiving Oculus headsets today,” the broker said in a note released on Monday.
“We expect more reviews and most importantly, tear downs in days or weeks. We expect our own Oculus Rift headset in the summer. We plan to dissemble the cable (as we previously have done for HDMI cables) and expect to find SEV chips in the headset cable. Until then, we expect tear downs on popular technology websites/blogs to confirm SEV’s presence in major consumer VR headsets, starting with Oculus Rift. We note investors expect SEV to be the sole source provider for relevant functions in the Oculus Rift and likely other major VR headsets, therefore presence of SEV chips in these headsets is a very important milestone,” the broker's Nikhil Thadani said.
The broker is not expecting the company to tap the market in the near-term but said it will have to “navigate working capital requirements carefully” throughout the first half of the year.
Shares in SEV were trading at 65 cents on Tuesday Morning, up 3.2%; Mackie reckons the shares are worth C$1.
RBC Capital Markets has adjusted its estimates for TE Connectivity Ltd (NYSE:TEL), the sensors solutions provider, on the back of some positive data points.
The March quarter saw stronger demand than RBC had been expecting, particularly in the automotive division, while there is potential for an uplift in sub-sea sales following an increase in capacity recently by the firm.
Throw in some modest foreign exchange benefits and the potential for the shares to rally on the strength of share buy-backs once the proceeds from the sale of the Broadband Network Solutions (BNS) business come through, and RBC is happy to reiterate its 'outperform' rating while nudging up the price target to $66 from $65.
The shares currently trade at $60.14.
The outpatient segment of Tenet Healthcare Corp (NYSE:THC) could be set to benefit from an increasing tendency for patients to be treated of-site, stockbroker Wedbush reckons.
A recent survey showed outpatient traffic in the first quarter of 201 was up 3.6% year-on-year, compared to a 2.3% annual increase in the preceding quarter – a stronger trend than the broker had been expecting.
“Inpatient diversion programs, where an insurer motivates the referring physician and/or patient to choose outpatient facilities over inpatient to have a procedure by sharing some of the savings, has been one of the fastest returning and most meaningful medical management programs we have seen implemented in our opinion,” Wedbush's Sarah James said.
The strongest trends are in the north-east, which plays to Tenet's strength.
Investors’ brief embrace of copper may be coming to an end, Dundee Capital Markets suggests.
Money managers cut their wagers on price gains for a second straight week, pulling back just before futures capped the worst slump in a month, Dundee noted, adding it's been barely a month since investors first started betting on a copper rally.
“Money managers reduced their net-long holdings in copper by 4.4% to 23,011 US futures and options in the week ended March 22, according to Commodity Futures Trading Commission data released three days later. As recently as late February, the investors were net-short, or wagering on price declines. Futures fell 2.3% to $2.229 a pound last week on the Comex in New York, the biggest loss since Feb. 12,” Dundee said.