Expect a "robust" 2016 from Spectra7, says Cantor Fitzgerald Canada

Things are about to get interesting for Spectra7 Microsystems (Spectra7 Microsystems Stock Quote, Chart, News: TSXV:SEV), says Cantor Fitzgerald Canada analyst Ralph Garcea.

Last Thursday, Spectra7 reported its fourth quarter and fiscal 2015 results. In the fourth quarter, the company lost $0.03 a share on revenue of $1.6-million, a topline that was down 15.8 per cent from the $1.9-million in revenue the company reported in Q4, 2014.

“The company has developed a strong product offering backed up by customer orders in markets that we anticipate to grow significantly in 2016 and beyond,” said CEO Tony Stelliga. “Our continued bookings strength demonstrates the market acceptance of our technology that allows ultralight, ultrathin interconnects.”

Garcea notes that the results were essentially in-line with his and the street’s expectations, but says the real story is what is to come for the rest of the year, when virtual reality will begin to become a reality in the marketplace. The analyst says Spectra7’s solution reduces weight and complexity in dramatic fashion, and deliver ultra-high bandwidth, with speeds up to 50Gbps.

“SEV has received “market acceptance” of its technology for ultra-light, ultra-thin, ultra-fast interconnects and expects a robust year of growth in 2016,” says Garcea. “Virtual Reality (VR) is estimated to be a $5.2B market by 2018 and with shipments of Oculus Rift expected this week, we believe SEV is well positioned in this dynamic segment. The HTC Vive ships April 5, 2016 and the PS4 VR device ships in October 2016.”

In a research update to clients today, Garcea maintained his “Buy” rating and one-year price target of $1.25 on Spectra7 Microsystems, implying a return of 87 per cent at the time of publication.