Lumenpulse should show continued improvement in Q3, says Euro Pacific

Look for better results as a result of continued improvement in execution at Lumenpulse (Lumenpulse Stock Quote, Chart, News: TSX:LMP), says Euro Pacific Canada analyst Andrej Krneta.

In a research update to clients yesterday previewing Lumenpulse’s upcoming third quarter results, Krneta maintained his “Buy” rating and $20.00 one-year target on Lumenpulse, implying a return of 27% at the time of publication.

Lumenpulse will report its third quarter results on Thursday, March 12th. The company is following on a Q2 in which it posted a profit of $400,000, or three cents a share, on revenue of 25.6-million, a topline that was 68% over the same period a year earlier.

Following those results, CEO Francois-Xavier Souvay outlined the company’s goals.

“Our objectives remain to continue growing Lumenpulse’s business at a growth rate exceeding the growth rate in the general lighting market for LED products and, over time, converging toward market growth, and to reach adjusted gross profit margin approaching 50 per cent and adjusted EBITDA margin of approximately 18 per cent to 20 per cent within the next five years,” he said.

Krneta thinks Lumenpulse will earn two cents a share on revenue of $27-milion in the third quarter.

“We expect the tailwinds of tightening execution to remain in place due to the measures taken to reverse the FQ115 missteps (capacity constraints, cash flow management),” said Krneta. “With the sales mix altered since mid-C2014 (UK acquisition) we expect a more seasonal impact on FQ3 results (vs. a year ago). A firming cash inflow will shore up confidence ahead of a more telling FQ415e (Lumenalpha ship in the US).”

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