Now that the dust has settled regarding the recent woes at Xerox (NYSE:XRX - Quotes, News, Boards), investors have jumped back into shares of Electronics For Imaging (NASDAQ:EFII - Quotes, News, Boards) with a vengeance. In the last ten days, the shares have risen nearly $10 as analysts have reiterated sentiments that EFI?s business remains quite robust. Many had been concerned that problems at Xerox, which is EFI?s second-largest customer, would curtail EFI?s profits in the quarter to come.
In fact, in an ironic twist, EFI?s business with Xerox is actually strengthening. Sales of Xerox?s color copiers and printers, which contain EFI subcomponents are sharply ahead of forecasts. (Xerox has been experiencing weakness in its black and white segment-an area in which EFI has little exposure). Specifically, Xerox?s DC12, powered by an EFI controller, has seen an accleration in sales.
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EFI recently made an investor presentation at a Prudential Securities conference and made very bullish comments. That helped account for the start of the price rise.
On Thursday, shares got a further lift when the company announced that it will provide upgrades for its controllers that drive several of Canon?s high end black and white copiers and printers. Canon is EFI?s largest customer. This should help the company to again top consensus estimates.
Despite a cautious tone on the recent earnings-related conference call, business looks quite robust for EFI. The company should boost quarterly profits in excess of 25% in the December quarter. Consensus estimates look for a profit of $0.42 a share, but $0.45-0.50 seems much more likely in light of recent quarterly performance.
Analyst:Dave Sterman
Updated on 11/5/99 with EFII at $47.50 Recommended 11/16/98 at $29.25 |
