JTS Random Thoughts
In looking back at the trading activity in early July when JTS pre-announced their expectations of lower second quarter earnings, it was interesting to see the stock move up on the news. It was almost as if the street was expecting something far worse. Except for their focus on ramping the Nordic and adding a couple of OEMs, the press release was pretty darn dissappointing.
Since that time, the stock has been pretty much locked in its recent trading range. It also doesn't appear that current prices reflect any sort of optimism. So the question is, what can we expect when earnings are released?
Well, it seems to me that since there were only 3 weeks left in the quarter when they pre-announced, I doubt we'll get any surprises when it comes to revenues, earnings, margins or units shipped. They should have had a good idea of what the results were going to be. Even if the outlook has not improved, it would appear that at the worst they would simply confirm their previous forward-looking remarks of slower growth. This situation would likely keep JTS in this same trading range for the time being.
However, if there's an indication of improvement to any of the numbers, a major OEM announcement, a major investor or something positive, then we could see some upward movement. At these prices, it wouldn't take much for a major percentage gain. I also believe that because JTS has been criticized for being overly optimistic in the past, there is the possibility they may have overcompensated in their July release, opening up the possibility of improvement at the actual earnings news.
Given the above, It would seem there's little downside risk in making an earnings play.
The flip side is that others may be thinking similarly, and if the news is a non-event, then the traders might bring the stock down a little as they unload their short-term positions.
Comments anyone?
Regards - Dale |
