Wednesday, 11 April 2007

Cormark Securities Target On Icron: $1.00.

Susan Streeter and David Kwan of Cormark Securities, formerly Sprott securities, updated their research on Icron yesterday, reiterating their target price of $1.00.

The well respected analysts stated that “while it is still too early to determine the ultimate success on WiRanger, we note that the risk is lower as the 802.11 wireless standard the product is based on is a standardized technology rather than an evolving one.”

“The reviews for the product have generally been positive, citing the product range of 100 feet as superior. The primary criticism relates to the cost of the product.

“Icron is planning to move from a FPGA to ASIC ([cheaper chipset]) solution in Q4/07 to early 2008, which Management estimates could reduce costs by at least 30%. As well, increased volumes (>10k units/month) would help the Company achieve economies of scale and also lead to a reduction in prices.”

“The Company believes the positive reviews it has received from Tier 1 players globally could help lead to the volumes required to reduce costs faster than anticipated. In addition, as costs decline, Management indicated the interest from OEMs and ODMs to include the WiRanger into their product lines will increase.”

In discussing Icron’s fundamental business, they state “In addition, the valuation warrants a closer look. Icron delivered on $6.3MM in revenue, or top-line growth of
39%, maintained a stable cash balance of $4.4MM ($0.18 per share), and turned a profit in Q4/06. We believe the current market capitalization of $13.5MM does not reflect these achievements. The stock is currently trading at 1.6x our f2007 revenue estimate, or 1.1x on a net of cash basis. Our target of $1.00 is based on just under 3x our f2007 revenue (2.5x net of cash) and implies a market capitalization of approximately $25MM.”