Metro Trading, Inc. Initiates Coverage on InVision Technologies (INVN)
Metro Trading, Inc. Consensus Recommendation Rating: Hold InVision Technologies, Inc (Nasdaq-NM: INVN chart, msgs)
DEERFIELD BEACH, Fla., Dec 6, 2001 /PRNewswire via COMTEX/ -- Metro Trading, Inc. is beginning coverage on InVision Technologies (Nasdaq: INVN chart, msgs) with a Hold Recommendation. Share price has increased nearly 900% since the September 10 close of $3.11 to hitting a new 52-week high on Dec 05 at $29.30. We believe a best-case scenario has been priced into this issue at current price levels.
PROFILE:
INVN develops, manufactures, markets and supports an explosive detection system for civil aviation security based on Computed Tomography (CT) technology. For the nine months ended 9/30/01, revenues fell 11% to $51.3 million. Net income totaled $680 thousand vs. a loss of $2.1 million. Revenues reflect decreased system sales and variations in product mix. Net income reflects cost improvements for the CTX 9000 system and reductions in commission and administrative expenses.
Price and Volume
52-Week Low
on 29-Dec-2000 $1.313
Recent Price $27.35
52-Week High
on 5-Dec-2001 $29.30
Beta 0.16
Daily Volume (3-month avg) 1.86M
Daily Volume (10-day avg) 3.55M
MARKET POSITION:
Focus on INVN and its products has been intense in the wake of the World Trade Center disaster and the recently passed Airline Security Bill. INVN and competitor, L3 Communications, are the only two companies, at this time, approved by the Federal Aviation Administration (FAA) to supply CT type scanning devices for airports. INVN, apparently supplying nearly 90% of those installed units, "seems" to be positioned well for future market share. Specifics however, on how to accomplish the December 2002 deadline to scan "every" bag have yet to be solidified and additionally -- how those monies allocated from Congress will actually go to this "type" of baggage scanning technology and more specifically, INVN.
We believe the market has overreacted to recent events and that the current price levels cannot be sustained by INVN's underlying business model.
Stock Performance
52-Week Change +1520.3%
52-Week Change Relative to S&P500 +1771.0%
Share-Related Items
Market Capitalization $362.9M
Shares Outstanding 13.3M
Float 8.80M
Valuation Ratios
Price/Book (mrq) 7.13
Price/Earnings (ttm) 385.21
Price/Sales (ttm) 5.27
COMPETITION:
The 30% false positive accuracy rate of the dated "X-ray" technology poses issues as to alternate solutions currently being sought. Emerging competition continues to put pressure on INVN.
The FAA is cultivating relations with the likes of PerkinElmer's, (PKI) to seek alternate solutions for smaller airports with scanning devices at 1/3 the cost of the current INVN technology forcing a further squeeze on INVN profit margins and essentially their market share.
Powerhouse General Electric, (GE) also seems well positioned to quickly maneuver into improving on current CT technology and to offer alternate solutions to meet the current demand given its recent, but still pending, acquisition of Imatron. Imatron (IMAT), has developed a proprietary technology Electron Beam Tomography (EBT) scanner to perform unique hospital clinical imaging applications. IMAT spun off InVision Technologies nearly five years ago.
More pressure continues on INVN with alternate technology offered by Implant Sciences Corporation (IMX) and HiEnergy Microdevices utilizing "smart-sniffing" detection hardware which seeks specific chemicals used in explosives. And a recently filed (11/28/01) Sacramento County, California lawsuit filed against INVN, by a former executive at HiEnergy Microdevices, also raises questions. Details surrounding this case and the merit therein have yet to be determined.
Short Interest
INVN InVision Technologies, Inc September October November
7,900 2,153,519 2,482,261
Shares Increased from Prev Month 2,145,619 328,742
% Increase from Prev Month 27,253 15.3
PUBLIC PRESSURE:
Research leads us to believe that InVision's small company infrastructure, capital limitations, and existing scanning technology may have difficulty to satisfy the spirit and goals of the Airline Securities Bill. Current Package scanning rates at 200 bags per hour per machine make it difficult to handle the reality during peak passenger flying intervals -- even if the estimated 2,000 machines were installed today to accomplish the task. Logistical concerns also prevail, given the space and positioning requirements, precarious training methodologies, and a proportional increase in false alarms which hamper INVN's devices. This additional confusion coupled with the current status of INVN scanning devices and their inability to differentiate consistently between the likes of cheese and explosives, begins to erode consumer confidence in the process. Additionally, the concerns of recently addressed FAA funding problems and why 23 INVN and L3 scanning devices have been stored in warehouses by the FAA, raises more questions as to where the anticipated $2 billion in government allotments will end up many investors have recently assumed would go to INVN.
SUMMARY:
We believe INVN is a hold due to the above and is fully priced at current price levels. Increased share value does not seem justified given the numerous business obstacles INVN faces to achieve a "best case scenario."
Reports by Metro Trading are prepared from data obtained from sources believed reliable, but not guaranteed, and are not considered to be all- inclusive. Reports are not to be considered as an offer to buy or sell or a solicitation of an offer to buy or sell the securities or options mentioned herein or any other securities, options or commodities. Metro Trading, Inc., its officers, directors, employees, related accounts and/or discretionary accounts, may, from time to time, maintain a long or short position or buy and/or sell the securities or related options or other derivative securities mentioned herein. In addition, Metro Trading, Inc. may from time to time, act as a market maker in the issuer's securities, but has no current position in InVision Technologies at the issuance date of this report. Opinions expressed are our present opinions only and are subject to change without notice. Metro Trading does not assume any responsibility or liability for the information contained in this report. Metro Trading, Inc is a member of the NASD / SIPC and a registered U.S. Broker Dealer and current market maker in InVision Technologies. Metro Trading recommends all investors perform their own due diligence and consult with a Financial Advisor before investing any capital.
Metro Trading is a member of the National Association of Securities Dealers, CRD number 42484.
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Source: Metro Trading, Inc.
Contact:
Christopher C. Tavares, +1-954-574-0400, MetroRN@bellsouth.net
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