It increasingly looks as if investors won’t see any production this year. In late September, Uni-Pixel said commercial production trials are underway, which actually doesn’t mean anything. Ostensibly, the company has been cultivating its production processes in a small, controlled fashion for quite a while now, and executives would say only that it is “quickly approaching the global market rollout of a functionally printed touch-screen sensor.”
.jpg) |
| Rivals are also working feverishly to build more advanced touch-sensor screens, and if Uni-Pixel waits much longer, a key window may have closed. |
On Seeking Alpha, some bloggers have suggested that Uni-Pixel is a complete fraud, and these apparent production delays are a mere cover-up for the fact that production will never take place — that the company, in effect, has been fooling Kodak and others, and possesses no special technological advantages.
However, there is no way to know that. To be sure, the fact that this company keeps moving the goalposts can hardly be assuring to its bullish supporters. But they insist that a revenue ramp will come, even if it’s pushed out to 2014.
My biggest concern is timing. Rivals are also working feverishly to build more advanced touch-sensor screens, and if Uni-Pixel waits much longer, a key window may have closed.
That may be a big concern for insiders as well. Since the early August conference call, they’ve been quietly heading for the exits, selling more than $2 million worth of stock. If Uni-Pixel were really on track for stunning revenue growth, and earnings per share (EPS) of more than $3 in 2014, as consensus forecasts imply, then these insiders would have to have their heads examined.
Instead, they are cashing in, even as this stock has fallen by half from its springtime highs.
Hefty Insider Selling
As the insiders have stepped up their sales, short sellers seem to be taking that as a cue to build bigger positions. In recent months, the short position has quietly moved up to 4.9 million shares, the highest level yet.
Rising Short Selling (mil. of shares)
Risks to Consider: As an upside risk, the company continues to speak of other partners besides Kodak, and if a key partner is named, shares could get a bump.
Action To Take–> Uni-Pixel will discuss third-quarter results in early November, at which time the company will be under the gun to deliver specific near-term revenue targets. Further delays will simply be fodder for the shorts and likely to discourage whatever bulls are left.
To be sure, this company faces a potentially huge market opportunity. And a partnership with Eastman Kodak is already more than the short sellers would have suspected this company could generate. Yet time is running short, and this stock, which has bounced around the $15 to $20 trading range in recent months, may not be able to hold up much longer if management doesn’t start delivering the goods.
This article was originally written by David Sterman and posted on StreetAuthority.
Warren Buffett’s Top 5 Stocks
Buffett’s firm, Berkshire Hathaway, holds dozens of stocks. But these five make up 75% of its portfolio… worth $65 billion. Click here to get Buffett’s top 5 stocks plus his 16 latest buys, FREE.
