Spectra7 Microsystems is facing strong headwinds, says Canaccord Genuity

Mar 23 17:03 2018 Print This Article

Semiconductor company Spectra7 Microsystems (TSX:SEV) is dealing with strong headwinds in its virtual reality/mixed reality business, says analyst Robert Young of Canaccord Genuity, who on Thursday dropped his recommendation from “Speculative Buy” to “Hold” and lowered his price target to C$0.20.

San Jose-based Spectra7 released its Q4 and year ended December 31, 2017, financials earlier in March, showing a 16 per cent increase in revenue over Q4/16 at $2.9 million (all figures in US dollars unless noted otherwise) and a 23 per cent increase in revenue for the year at $10.6 million.

Nevertheless, Young says that in meeting with management following the Q4 and year end release, he was concerned to hear about how the company would respond to what he saw as a strained balance sheet.

“The VR/MR market, which represents ~70% of Spectra7’s current business, has met heavier-than-expected headwinds in Q1/18. This weakens the bridge to a ramp in DCI sales, which we model starting in Q4/18,” says Young in a research update to clients. “Given these factors, we have reduced estimates, which puts added strain on the balance sheet. We now see the need for a cash infusion before the end of Q3/18.”

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Cantech Letter

Founded in 2008 by Nick Waddell, Cantech Letter is an online magazine focusing on Canadian technology. The site has grown into one of the most popular and respected financial sites in Canada, and was described by Canadian Business Magazine as “one of Canada’s premier technology newsletters”. Waddell, who is Senior Editor, is routinely called on by the mainstream media for perspective on Canadian technology, and has been featured on BNN, CTV News Channel, and the CBC program “The Lang and O’Leary Exchange” in addition to mainstream print media such as The Guardian, The International Business Times, The Globe and Mail, Macleans, The Waterloo Record , Canadian Business, Slate, and Business Insider. You can email Nick at nick@cantechletter.com Cantech Letter is focused on those companies listed on the TSX and TSXV Technology, Cleantech and Life Sciences Sectors. Each year we present the Cantech Letter Awards, which honor Canada’s Top Technology Stock and Top Technology Stock Executive.

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