Chardan Capital’s James McIlree expects 2017 to be a “pivotal year” for Vuzix Corporation (NASDAQ: VUZI), with “ramp in production of the M300, introduction of the M3000, the Blade 3000, and waveguide products, and delivery of customized smart glasses to Toshiba in the second half,” all of which were likely to lead to increased revenues, with the fourth quarter being the strongest quarter of the year and Q1 the weakest.
The analyst reiterated a Buy rating on the company, with a price target of $10 .
Ending 2016
McIlree mentioned that the Q4 revenue reported by Vuzix, of $620,000 , was largely in line with the estimate of $600,000 .
However, gross margin was lower, with the company continuing to work through the high cost production of iWear.
Smart glass volumes remained modest through the year, as customers awaited the M300 while purchasing the M100 in small amounts.
2017 Expectations
“The company has wisely chosen to exit the crowded consumer market and took a $1.1 million inventory charge on iWear and will lower ASP (average selling price) to $299 in order to move out the rest of its inventory over the coming quarters,” the analyst stated.
However, McIlree noted that the overall consumer market was crowded and continued to suffer from production adoption issues, which were likely to make things difficult for players in this space.
“Targeting the commercial and industrial market is likely to be much more lucrative for Vuzix since it is a leader in this space and product adoption is increasing,” the analyst recommended.
Product Launches
With the M300 having received certifications from the respective regulatory bodies in the United States , Europe , Canada , Australia , New Zealand and India , shipment had begun of production volumes, and Vuzix expects production capacity of 1,500 units per month by the end of the current quarter.
“Demand for the M100 is stable, even with the M300 introduction and is a sign of modest cannibalization to date,” the analyst went on to say, while adding, “We believe the waveguide components, the Blade 3000 and the M3000, which are based on the company’s proprietary waveguides, are breakthrough products and will enable a much larger market.”
