Estimates for ANADIGICS, Inc. (ANAD) have been on the rise following the release of better-than-expected results for the fourth quarter of 2009.
Top-line growth surpassed management’s guidance driven by higher-than-expected shipments in each of the main product categories: wideband CDMA, wireless LAN, WiMAX and cable products.
Net loss (including stock based-compensation expense) came in at 9 cents per share, much lower than the Zacks Consensus of 14 cents. The lower loss was due to higher revenues and gross margin which positively impacted the bottom-line. Excluding stock-based compensation expense, net loss came in at 5 cents per share.
Agreement in Revisions
On its fourth quarter conference call, management stated that the company continues to see strong bookings in the quarter in the wireless product line. Hence, wireless revenue is expected to grow by approximately 20% sequentially. This growth is expected to offset a previously-expected decline in wireless LAN revenue.
Three out of the four analysts covering the stock have raised their estimates in the last 30 days for 2010, with no revisions in the opposite direction.
There have been no revisions in the estimates for 2011 yet.
For the first quarter, three out of the four analysts covering the stock have raised their estimates in the last 30 days for 2010, with no revisions in the opposite direction.
Magnitude – Loss Narrows
The current Zacks Consensus Estimate for 2010 is a loss of 23 cents, an improvement of 10 cents in the last 30 days.
ANADIGICS has consistently exceeded guidance. In terms of earnings surprises, earnings exceeded the Zacks Consensus Estimate in the last quarter by 35.71% and third quarter beat the consensus by 21.05%. On an average, earnings have exceeded the Zacks Consensus Estimate by 23.27%.
For the first quarter, the current Zacks Consensus Estimate is a loss of 8 cents compared to 14 cents 30 days ago.
Neutral on ANAD
In 2009, ANADIGICS tried to win back some of its lost market share from Samsung, which it earlier lost as it was not able to meet increased Samsung demand. This was mainly due to inefficiencies in manufacturing operations. The problem was compounded by the recent economic slowdown which led to a delay in orders from other customers as well.
On the fourth quarterly conference call, management stated that its Samsung business has rebounded very well and is showing strong signs of growth in the first quarter of 2010.
Management also managed to improve production efficiency. The company entered into a hybrid manufacturing strategy with WIN Semiconductors to provide additional and flexible capacity beyond its main fabrication plant in Warren, NJ with no additional capital investment. This should boost margins going forward.
The focus on 2010 will be on new product introductions along with improving operating efficiency which should lead to a gain in market share at both new and existing customers. The company wants to forge relationships with customers such as Huawei, HTC, and Nokia (NOK).
We would like to stay on the sidelines before being positive on stock. Our long-term recommendation for ANADIGICS is Neutral, which means the stock is expected to perform in line with the broader market.
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