GREY:TZWLF - Post by User
Post by
403xyz1on Aug 17, 2010 9:04am
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Post# 17356450
Canaccord/Genuity lowers target
Canaccord/Genuity lowers target
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Tranzeo Wireless Technologies Inc.
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TZT : TSX : C
.70 | C$42.0M | Speculative Buy, C$1.50 $B"-(B
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·Q2 results miss expectations; maintaining SPECULATIVE BUY recommendation but lowering target price to C$1.50 from C$1.80
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Eyal Ofir, 1.416.869.7215
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Event
Tranzeo reported Q2/F10 results that missed our top and bottom line estimates. Tranzeo reported revenue of C$5.1 million (up 53% Y/Y), below our C$5.8 million estimate. On the bottom line, Tranzeo reported GAAP EPS of (C
.07), but when adjusted for one-time items, amortization related to the Aperto acquisition and stock-based compensation, adjusted EPS would have been (C
.04), one penny below our expectation for a loss of three cents.
Impact
Negative. While the company was able to hit the lower end of its prior Q2 guidance of C$5-7 million and it reiterated its full-year guidance of C$40-45 million, we have taken a more conservative outlook considering management's commentary about potential delays with a specific Indonesian customer. Even though this customer seems to be back on track and there are other opportunities in the region, we have lowered the risk built into the significant revenue ramp in the back half of the year and have cut our estimates to C$35 million in revenue and a loss of two pennies for F2010 (down from C$40.8 million/C
.03). For F2011 we have also lowered our estimates by C$5 million and now sit at C$65 million on the top line and C
.09 in adjusted EPS. From an operating update perspective, it seems that the company's opportunities continue to track well both in Indonesia and India and we look forward to when more visibility is provided for these opportunities.
Action
We are maintaining our SPECULATIVE BUY recommendation but are lowering our target price to C$1.50 from C$1.80 based on our DCF and industry comps analyses. Our target price implies a F2011E P/E multiple of 17x."
I am not thrilled with this quarter, but Canaccord seems to be only taking a cover your a$$ approach as TZT itself re-iterated its full year guidance of $40-45MM.
It hurts, but I guess I will still have to
©Wait and Win™
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