Technology
Short thesis based on margin sustainability concerns and earnings quality issues - Gradient’s 12-page report focuses on 1) Smaller customers driving growth (increases risk of surprise sales declines from customer hardship). 2) Believes management may have pulled levers to optically improve operating margin. 3) Inventory has surged ahead of supply-chain threats. 4) Accrued expenses benefited TTM operating profit but could turn to a headwind. 5) Capitalised costs have surged. 6) Valuation metrics leave room for further downside.
Edition: 133
- 14 April, 2022
Technology
Priced for perfection despite signs of growth waning - overly bullish management forecasts to leave investors disappointed. CALX has benefitted from an increase in broadband service providers adopting its software solutions during a time when people were staying at home, but those trends are now changing. Comcast and Altice USA have both recently reported a decline in broadband subscribers and Hamed Khorsand believes CALX’s customer concentration towards smaller providers makes it prone to even greater volatility with orders. 12-month TP $13 (75% downside).
Edition: 120
- 01 October, 2021