Vuzix's Accelerated Sales Ramp Should Continue In 2017

Following Vuzix Corporation VUZI reporting Q4 revenue in line with the estimate, Chardan Capital’s James McIlree mentioned that new product launches are expected to drive the company’s growth through 2017.

The analyst maintained a Buy rating on the company, with a price target of $10.

Q4 And Beyond

Vuzix reported its Q4 revenue at $620,000, in line with the estimate, although gross margins missed expectations as the company continued to worth through the high cost production of iWear.

“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,” McIlree stated.

The analyst pointed out that the overall consumer market was currently crowded and continued to see product adoption issues, making it difficult for players in the 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,” McIlree went on to say, while expecting accelerated revenue ramp in 2017.

Related Link: Vuzix Provides Business Update and Reports Full Year and Fourth Quarter 2016 Financial Results

New Product Introductions

Vuzix’s M300 product has received certification from the requisite regulatory bodies in the U.S., Europe, Canada, Australia, New Zealand and India, and the shipping of production volumes has begun.

In addition, demand for M100 continues to be stable, despite the M300 launch, with signs of little cannibalization so far.

“iWear should be a modest contributor, as will NRE from Toshiba from the recently inked collaboration,” McIlree predicted, while expecting revenue of $10.2 million for 2017, with revnue of $1.5 million in Q1.