Rubicon Has Come a Long Way: Where to Next?

| About: Rubicon Technology, (RBCN)

The good news is flowin for Rubicon Technology (NASDAQ:RBCN), but traders aren’t impressed enough to continue to send the stock into the stratosphere l.. at least in the early going. The stock is down a few percent as I write this (Thursday after market close). The company beat analyst estimates by reporting a Q2 EPS of $0.18, vs the estimate of $0.14 on revenues of $15.8 million vs the estimate of $14.50 million. Sequentially, that’s a 157% bump in EPS and a 37% bump in revenues. Quarter over quarter, it’s a much bigger improvement considering the company reported a loss of .15/share in the year ago quarter on revenues of just $3.2 million. Not too surprising is a bump in margins as well. The company increased gross margins to 46% from 36% in the prior quarter. Clearly, a whopper of a quarter out of RBCN, but this is a stock that has come a LONG way, so traders may be “selling the news”.

Looking ahead to next quarter, the company sees pricing getting even better and is estimating revenue at $19.5 million and EPS at .28/share vs the analyst estimates of $17.9 million and .19/share respectively. Margins are expected to improve again to the low 50s range.

To top it off, Rubicon has announced it has won a supply agreement with a major LED chip manufacturer to provide 6 inch polished substrates from Nov 2010 to Dec 2011. The value of the contract is $71 million which is around what they are likely to generate for the entire year in 2010, so a significant deal.

Even with the run RBCN has had, I’m a bit surprised it’s not seeing some upside action after hours. Technically, it is a bit shaky up here having taken out key support of the 50 day moving average in Thursday’s regular session.

Disclosure: No position

About this article:

Tagged: , Semiconductor - Specialized, Earnings
Problem with this article? Please tell us. Disagree with this article? .