Yesterday, AudioCodes’ stock had its forth in row jump up, this time by 8.47% and closed at $3.20 for a share. The shares continue trading above their price channel and the exploding volume of 329,000 share within a day is enormous for the usually rather illiquid stock. Although AUDC closed at the highest price offered during the trading session, it seems that the volatility has been expanded. Which suggests not only larger jumps in the price, either up or down, but also reveals that the market could not easily coincide on the higher price.
The 22.6% gained since the second quarter results were announced last Wednesday confirm the positive reaction of the market, and it was additionally supported by several press releases by the company. The provider of VoIP technologies and Voice Network products kept its investors duly up to date over the past month, announcing in addition to the financial results some product improvements to better respond to customer needs, and a new CFO in the meantime.
Some positive corporate updates were extremely needed for the stock, which was on an abrupt downtrend since the beginning of May and had difficulties to recover. According to the earnings press release, revenues increased by 4.89% during the second quarter of the year. Further, it seems that AudioCodes’ business was profitable over the first two quarters of this year, as compared to a net loss of $2.8 million for 2009.
Though, investors currently do not seem to anticipate growing sales and also do not appreciate the capital structure with relatively low debt. The stock appears undervalued in both P/S and P/B ratios. One of the risks related to the future profitability is mentioned in the annual financial report filed end of June. AudioCodes still depends for a substantial part of its sales on a limited number of customers, the largest from which filed for bankruptcy protection in January last year.
The company’s strategy to expand the business through acquisitions and joint ventures also did not prove very successful so far and contributed through considerable impairment charges more to the losses rather than increase the value of the company.
