NANOPHASE TECHNOLOGIES CORP (NANX) 6 1/4 -5 3/8. Company warns that revenue will be light, but earnings will be in line. Yet, the stock gets crushed. Why? Well, Nanophase shares should never have traded in the teens. We backed up the view that the shares were overvalued with a short recommendation in late December. Unfortunately, we removed that recommendation yesterday after the stock had fallen approximately 20% from the initial level. Today, NANX trades another 46% lower, after the developer of advanced materials using nanocrystalline compounds said it anticipates weaker than expected
4th qtr revenues of approximately $1.5 million. Although the revenues will come in shy of expectations, they will rise sharply from year-ago's $308,586 and will increase about 25% on a sequential basis. More important, the company continues to see a small profit for the qtr, making it Nanophase's first profitably quarter and allowing the company to at least match Wall Street's $0.01 per share estimate. If this were all Nanophase had to say, we would probably be looking to
buy the stock at this level, viewing the sharp decline as an overreaction. However, the company also noted that anticipated sales of product for chemical mechanical polishing (CMP) slurries for semiconductor production were not made because of protracted negotiations relating to the sale by the company's principal
customer, Moyco Technologies, of its CMP business. Nanophase says the company has now entered into a new supply agreement with the purchaser of Moyco's CMP assets...IMO: I tasted a little this AM. I plan to pick up more below 6 if given the opportunity. I think $10-11/sh is a more reasonable value given the companies prospects. And just think, I thought Christmas was over. |
