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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Sean Collett who wrote (74965)	1/28/2024 3:24:55 PM
From: Harshu Vyas	Respond to of 78515

That sounds worse than it actually is, imo - what happened was that CUTR didn't buy enough of ZO's stock. You're right that ZO accounts for about 15% of revenue. BUT, if you read the 10K those revenue boosts were "temporary" due to the Covid pandemic and management expected revenues to materially decline in coming months. I'm thinking it may have been a deliberate decision to violate the agreement. But this is just a guess - of course, I'm just saying what I'm seeing. At the end of the day, you're not buying a business for its revenues. Selling ZO's products isn't at all a core function of the Cutera business. Ideally, if it was a profitable segment, it'd be useful to keep it, but we don't even know if it was at any point; let alone now when revenues from that segment are slowing. If ZO drops Cutera, I don't really care. Hell, the market's already priced that in - and much, much more! As for AviClear, that's been discussed before. Ex-management made the mistake of leasing their devices ($5k) to the wrong practitioners when they should have sold them outright for $100k. Hence, the low and disappointing revenues. A terrible blunder from ex-management that new management are slowly trying to correct - but it's a hell of an ask. As I've said, I see the primary risk lying with AviClear. Yes, the financials are ick-y and there are other things going on, but AviClear's success/failure will drive the share price (- and could spur a buyout). This, to me, is a certainty and will trump whatever botched financials may be going on in the background. I don't think Cutera will ever be massively profitable. It's possible, but cash flow break-even is my expectation for Cutera. And private market value for a company that conservatively can do $200m annually and more or less break-even (with all of the IP that Cutera carry) is much higher than the $50-60m asking price today. If they haven't achieved cash flow break-even by the time they're down to $50m cash, I'll throw in the towel. I understand there's problems and I understand that this isn't for everyone. But this is really the most sensible pick I can find in this market. The share price is getting taken for a ride and with no new information people are becoming more fearful. If something had changed for the worse to the point that my thesis was broken, I'd sell. I'm not that stubborn, but I'm stubborn enough to hold when nothing's happened yet! Remember, you're goal is to beat the market as an investor. You should be constantly meditating on this fact if you're willing to sacrifice time to do this. If you can't beat the market, join the market - and if after a handful of years, I feel that I don't have the capability, I'll give up, buy the S&P500 and do something else. Well, Cutera is a rare stock that I think could beat the market if you stick with it for long enough. Anyway, I think the thread's bored of Cutera now. >g<