Meaningful Revenue Ramp Up Unlikely In For Xcerra In 2016

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Despite continued momentum of the new products launched by Xcerra Corp XCRA, the company is unlikely to record significant revenue growth in 2016, DA Davidson’s Thomas Diffely said in a report. He reiterated a Buy rating on the company, with a price target of $10.

FQ4 Preview

Xcerra is scheduled to report its July quarter earnings on September 1st, and is likely to meet expectations. Analyst Diffely estimates the quarter’s revenue at $93 million, representing 13 percent sequential growth, and pro-forma EPS at $0.09.

“Growth in the quarter will largely be driven by normal seasonality, healthier demand in China (for both testers and handlers), modest contribution from a couple of new products, and no meaningful headwinds from either Brexit or FX,” Diffely wrote.

Concerns Over 2016 Results

The analyst reduced the revenue estimate for CY16 from $365 million to $352 million, commenting that the expected growth in the MCU and PA markets had not materializing and that the timing of revenue contributions from new products and markets warranted a more conservative view.

“The new product momentum (a few new FPD customers, a couple InCarrier customers, multiple new handler evaluations, ongoing expansion of the contractor business) continues to build but, as the company is still a couple of quarters away from a meaningful revenue impact, the stock remains depressed,” Diffely stated.

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Posted In: Analyst ColorLong IdeasReiterationAnalyst RatingsTrading IdeasDA DavidsonThomas Diffely
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