Anadigics (NASDAQ: ANAD) makes
gallium arsenide (GaAs) and indium phosphide (InP) radio frequency integrated circuits for the broadband wireless and wireline communications markets. The physical properties of GaAs and InP allow the firm to make chips that are smaller, faster and more energy efficient than the usual silicon-based devices. The company focuses on applications for wireless local area networks, cable set-top boxes, cell phones, cable television systems, microwave systems and fiber-to-the-premises communications systems. Customers include Intel (NASDAQ: INTC) and Motorola (NYSE: MOT).
The firm surprised the Street last week, when it reported Q1 EPS of 15 cents and revenues of $74.4 million. Analysts had been looking for ten cents and $69.2 million. Management also guided Q2 EPS to 16-17 cents (13 cent consensus) and Q2 revenues to $77-$79 million ($72.96M consensus). Roth Capital subsequently reiterated its "buy" recommendation on ANAD and Charter Equity upgraded the stock to "market perform".
The shares
popped on the news and are now forming a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Altogether, brokers now recommend the issue with six "strong buys", two "buys" and five "holds". Analysts see a 22% growth rate, through the next year. The ANAD Price to Sales ratio (2.71), Price to Book ratio (2.67) and EPS Growth rate (0.00 to 0.15 yr/yr) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. Over the past 52 weeks, the stock has traded between $5.85 and $19.53. A stop-loss of $9.50 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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