Positive mention of HMTT
Message 11090646
... But, in my opinion the best way to play this probably rebound is through the component makers of the disk drives, such as Read-Rite (NASDAQ: RDRT), HMT Technology (NASDAQ: HMTT), & Komag Inc. (NASDAQ: KMAG).
With that, I am issuing a BUY rating on both Read-Rite and HMT Technology with a 12-month price target of $10 and $6 respectively. { ... }
HMT Technology I am also issuing a BUY as stated above. With their recent announcement that Western Digital and Maxtor both will be buying their 6.8GB thin-film media, I feel that this will help stabilize their product offering and backlog in the future. With management that seems to read the industry well, with cash building up for the past year, HMT Technology seems poised as a hidden lion in the vast plains of competitors to leap ahead when this industry fully recovers. Only one major thing that concerns me though is the speed at
which HMT is converting to the higher 6.8 GB disk platters. At the end of the latest quarter, 30% of their sales were still of the 4.3GB or less category, which is why I believe that the new Western Digital and Maxtor agreements will boost the bottom line.
As the world's leading independent supplier of thin-film media, Komag provides more stability than HMT Technology does. What worries me about Komag, is that it is in the mist of a management reshuffling that could potentially have some adverse effect on Komag in the near future. In addition, unlike HMT Technology which saw an increase in their cash reserves, Komag announced a nearly 20% drop in their cash balance to $94 million from $128 million in the latest quarter. Though Komag has plenty of cash to survive on, it helps bring in
doubt of management's control over overhead at this time. On the bright side, Komag is moving forward smoothly with their transition to at least 4.3GB platters as only 14% of their sales were from less than 4.3GB as compared to 30% for HMT Technology. So at this time I am issuing an ATTRACTIVE rating on Komag with a 12-month target of $6.
With all the recent news all indicating a better pricing environment for the disk industry as a whole, I feel that the time to get in is now. With little downside left the stocks in the industry, any decline in their respective stocks could pose as a buying opportunity.
patientinvestor.com |
