Many of the longtime GTAT shareholders have been expressing grievances regarding what is viewed as an imbalanced investor perception and subsequent poor pricing of GTAT shares. Furthermore, the same GTAT investors have been wondering why GTAT shares failed to participate in a recent sector rally. Whereas it was that very perception, at least in part, GTAT being part of the solar sector brought it down to its knees once an industry darling. GTAT is currently trading close to a Book Value.
Based on guided revenue by the management, although GTAT still derives sizable business from traditional solar sector, the revenue breakdown looks nothing like revenue breakdown of previous years. The management has been busy diversifying revenue stream via R&D and strategic acquisitions just as they were busy right sizing the company. The analyst community expects Current Qtr. (March 13) earnings of (0.14) pps and has an average revenue estimate of 71.58m (Yahoo! Finance). Many of the longtime investors and the new alike have been excited regarding company’s future revenue potential deriving from new business opportunities.
Yet, Mean analysts recommendation is a hold with low price target of 3.00 and high price target of 6.00. Thus, GTAT is currently trading at a book value and at an analysts’ low price target. IMO, this is not surprising since analysts’ expectation for 1st Qtr. 13 earnings is minus 0.14 cents pps or loss of $15.936M (0.14 x 113.83M) for the quarter. The expectation is not high and the bad news is already priced into current valuation.
Does the pps of GTAT have the similar upside potential as FSLR upon beat and guiding higher? One only needs to consider the close to 35% short interests assuming no conspiracy, right? The management has been sending out a long range telegraph to the investor community, analysts, and shorts for a while regarding a long awaited introduction of new product cycle starting 2nd half of 13 and into 2014, etc. God forbid a
hangman; Very well thought out and said. I agree with all you're saying.
You mentioned analysts a couple times, and I think they are one of the clues to why this stock, with all its potential, is stuck in the doldrums. IMO, analysts seem to be more auditors than risk takers. They thoroughly look over the Q reports, while ignoring the potential one or two years down the line. They normally take the conservative approach and wait for the numbers to come in before making a call. After all, their “reputations” (for me they have zero reputation) are on the line. Just look at the the number of upgrades and downgrades that occur after a Q report and the stock has moved 20-30%.
When GT's diversifying starts to show up later this year in the quarterlies and this stock is in the $4-$5 range, than the analysts will start to get on board with upgrades. By then us risk-taker investors will be looking at some nice gains.
I see the whole game as a contest between the auditors and the gamblers – and my bet is on GTAT.
Analysts bunch are definitely a laggards. Yet, if GTAT beats and guide higher, or even just guide higher, IMO, there is a good chance that even this bunch will be force to upgrade the stock. This will provide another opportunity for value adjustment, etc. When they do, they usually move up the price targets as well.
I think you nail it! I too believe that this stock could significantly out perform in the mid to longer term. And since price move proceeds fundamentals, we will see this stock move in anticipation of improvement in business conditions, etc. Therefore, the chance to buy this cheap will not last forever.
This stock basically stop going down and has been on consolidation for the last 5 months. This tell me a lot about the stock and perhaps which direction this stock may move next. This consolidation is basically about transfer of ownership of stocks from weak hands to stronger hands. It also gives shorts chance to cover without having it high too quickly.
God forbid any major announcement regarding the SAP! Or, solar contracts! Surely, the shareholders have been bankrolling the management’s salary through some tough times. It is about time that the GTAT’s management returns the favor.