Nexxus Lighting Plunges After Earnings Miss

| About: Revolution Lighting (RVLT)

Nexxus Lighting (OTCPK:NEXS) is an LED play to watch, but Friday it got pummeled after missing Wall St estimates. The estimates called for a loss of .10/share, but the company reported an adjusted loss of .12/share (still much better than the .21/share loss they reported last year). They were a bit shy on the revenue side as well, posting $3.16 million vs. the estimate of $3.25 million. It seems to be a bit of an overreaction especially considering the growth they are seeing in their LED business and the improvement over the year ago quarter, but the lower quality stocks are really getting hit on the misses and today’s overall market weakness certainly isn’t helping.

As mentioned above, the growth in sales of their Array LED replacement bulbs is impressive. They reported $500k in revenues last quarter vs. just $93k in the year ago period. That growth was tempered by a significant decrease on their commercial lighting business due to a lack of new construction.

The CEO commented on their Array LED product and how growth should improve further once Energy Star requirements are sorted out: “The response to the quality and performance of our Array product in the market and at several of the world’s largest lighting trade shows has been very positive. We are also very excited about our recent new product introductions and their potential impact on sales.”

“There is no doubt that the December 2009 publication of Energy Star program requirements for integral LED replacement lamps, and their subsequent amendment on March 22 of this year, has created some confusion in the market. This confusion has caused some utilities to reassess the timing of their incentive rebate programs and may have delayed certain projects. We are actively engaging customers and utilities to move forward as quickly as possible.”

Technically, NEXS has now given up the entire April run and I think it’s a very compelling play at the $3 – $3.50 level; I may scale in at that level with a small position.

Disclosure: None.