Things to consider:
1) FINANCIALS...NEON is priced fairly rich. When I bought shortly after last quarter's earnings, it was because the momentum was so strong in that NEON was experiencing strong sequential growth and they had beat estimates by 100%.
Consider now the last 6 quarters of revenues (in millions): 8.3, 9.6, 11.5, 17.5, 27.3, and 29.6.
And the last 6 quarters of net income (in millions): .59, .84, 1.5, 2.7, 4.6, and 3.7.
Or in earnings per share: 0.03, 0.04, 0.07, 0.10, 0.15, and 0.11.
Where is the sequential increase that would justify a PE of 120, or a market cap of $1.5 billion?
2) PSYCHOLOGY...there are a lot of people stuck in this stock. It's quite a disappointment that NEON is lower now than it was prior to last quarters earnings given that they had such a blowout quarter 3 months ago. Also, the earnings surprise factor isn't there this time.
3) NEW MONEY...perhaps NEON will attract new buyers. They did beat estimates. But you have to wonder. NEON's stock price has lagged in the last 3 months, even after they beat estimates by 100% last quarter. Now they've "only" beaten estimates by 2 cents. Where is this stock headed now, and in the next 3 months?
These are questions that you have to ask yourself.
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