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MicroVision: Analyst Ratings Upgrade

6/26/2015 Anant Goel

Small cap PicoP display technology company MicroVision (NASDAQ:MVIS) has seen its stock price surge over the past three months.

To keep traders and investors from getting carried away [or on the flip side, lose interest due to lack of news over the last three months], we have a look at what market consensus ratings are for MVIS.

Analysis

MVIS last traded at $3.16 after moving up 112% over the last three months… in a dramatic move from $2 to $4.23 after the SONY licensing agreement and proprietary components order.

The company is set to report positive earnings in the 4th Qtr ending December 2015… demonstrating strong growth from EPS year over year. The company also has a strong balance sheet, with $16.7 million in cash and short term investments, $18.3 million in back log, and essentially no debt.

Over the past few years, MicroVision has done a commendable job of repositioning itself for tomorrow's market. It has closed down its products business, which was suffering from lack of capital, while building a new and fast-growing licensing PicoP technology and sale of proprietary components. This has allowed MVIS to remain on the cutting edge of laser based PicoP technology for mobile devices, which is a huge growth industry. MicroVision seems to be well ahead of its two closest competitors in the Pico projection space; Texas Instruments, 3M, and a few others.

In spite of these growth opportunities and its strong balance sheet, MVIS closed at $3.16 today [Friday June 26th] having made a high of $4.23 on March 18th. Shares have traded much lower than the broader market since the company reported licensing fee [$8 million] and component order [$14.5 million] from SONY in March. This is becoming a theme with MVIS; for the last seven years and has been punished, time and again, by the market.

The cause of this underperformance, in my opinion, is poor Investor Relations. Year after year [and in recent quarters], the company has done a bad job of explaining its story and growth prospects to analysts and investors, and has been overly pessimistic…or avoided giving any guidance altogether, using NDAs and contract agreements as reasons.

Analysts from financial institutions following MVIS, quarter after quarter, have kept their underweight rating. Of course, it's possible that they have information the company does not have, but it seems more likely that the problem is MicroVision’s inability or unwillingness to "accentuate the positive", so to speak.

In the long run, Investor Relations doesn't matter. Companies have to "put up or shut up" by delivering earnings growth. But in the short-medium term, poor Investor Relations can lead analysts and investors to under-rate a company's prospects. This is what is currently happening at MVIS, and it creates a buying opportunity. If the company delivers in total sales and royalty revenues, earnings will come in far ahead of analyst estimates. As this scenario plays out, MVIS shares have a good chance to rise to $10 or even higher.

The most notable thing about this year’s ASM [annual shareholder meeting] was the up-beat attitude of the BODs and the corporate management at MicroVision. I've been covering these ASMs for a few years and the feedback confirms when they've been down and "getting started” was a significant challenge. Last year, "everything was aligned," and this year the overall message was “things are going great”… “But, don't get TOO optimistic, there may be a couple of bumps in the road.” “There will be some problems, but they're GOOD problems to have.”

Analyst Ratings Upgrade

The two institutional analysts that follow the company have recently upgraded their rating of MVIS stock and expect substantial growth in revenue and earnings in the second half of 2015.

Oppenheimer Reiterates Perform on MicroVision, Inc. Following 1Q:15 Results

Northland Capital Markets Remains Bullish Ahead of MicroVision (MVIS) Potential 2H Ramp

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