Dloughy: Why, What & The Target Price The answer to why SMY has received additional analyst coverage is simple - Dloughy is looking for investment opportunities in what it considers an industry poised for sustained long term growth. "Few emerging technology markets have the backing of so many major organizations, making it a unique time for the industry."
RFID Industry Report
Dennis Fong, the analyst who published the initiating coverage on SMY
October 12, 2004, has also written a comprehensive 40-page report, dated the same day, on the emerging RFID industry. He notes that in the supply chain, having open standards should promote adoption of interoperable hardware in which end-users can build 'best of breed' solutions rather than necessarily purchasing tags and readers from the same supplier.
On the tag side Fong believes the large semiconductor manufacturers, -TI, Philips, STM Micro, EM Marin, Infineon - although not pure plays, can best meet open standard, low-cost tag needs. He names Symbol, Intermec, Checkpoint and Zebra as providing more direct exposure in the RFID industry.
On the reader side, Fong says smaller RFID companies with good
differentiating reader technology will be able to succeed: "we believe smaller best of breed agile reader vendors can still be successful through the right partnerships and distribution channels." Interestingly, he also says "we also expect this segment to consolidate as the industry grows" leading one to speculate on longer term acquisition possibilities.
SAMSys Report
SMY is referred to as a well positioned pure play or direct investment in 2005 supply chain mandates, with an early mover advantage. The one year target is $4.10 but Fong says this could be raised, and the 'speculative' caveat removed if SMY begins to exceed his short-term revenue estimates. He expects revenue visibility to improve over the next 12 months.
The report says SMY is one of the few reader companies actively involved with retailers in Europe and North America and "has one of the most flexible platforms on the market." SMY was one of the first to move in the MP/MF direction and currently offers over 10 different high end multi-protocol readers. SMY "in our view, possesses one of the most complete lines of readers on the market today."
"From a competitive standpoint, we believe SAMSys is well positioned to benefit from early pallet and case tagging supply chain mandates because its one of the few manufacturers with products readily available, while also offering the most features."
Contracts are mentionned with Pacific Cycle, Jack Link and Metro Group, 2 projects with Microsoft, an OEM agreement with SATO, and active participation in numerous pilots and test programs which "lays the groundwork for a competitive advantage in the future." The report says the Metro opportunity alone could be worth up to US$30 million to SMY in the long run.