Left-for-Dead Syntax-Brillian Should Jump on Bullish Note

Baird is upgrading Syntax-Brillian (NASDAQ:BRLC) to Outperform from Neutral based on recently announced strategic initiatives and what they view as an attractive valuation. New price target is $3.

Syntax-Brillian is ramping TV manufacturing at Compal, moving away from Kolin. Firm believes the move eliminates most of the counterparty risk seen with the Kolin relationship. Syntax-Brillian also announced it will implement headcount reduction, cutting its overhead costs by approximately 20%.

In firm's opinion, the company's decision to focus on strategic customers is positive and will result in better service to its U.S. big-box retailers. Should the company be successful securing guaranteed orders from some of its big-box customers, working capital issues would be virtually eliminated.

They believe Syntax-Brillian's chances of bankruptcy are very slim and that the company will be able to refinance its debt, significantly lowering its interest expense. Recent streamlining of business model should help cash flows as well.

Current weakness in U.S. TV demand is leading Syntax-Brillian to gain market share as tier-two/three TV brands are currently ongoing consolidation, in Baird's view. Excess panel capacity should help Syntax-Brillian's gross margin going forward. * Risks to the stock remain significant, including a potential delisting due to filing delays, potential financial restatements, as well as possible additional cash issues.

However, these risks are already built into the current valuation. The stock is currently trading at about 0.3x last reported tangible book and 0.2x our new C08 revenue estimate.

Notablecalls: Wow. This will help the stock lift today as Baird is reportedly one of the most influential ratings movers. BRLC has been left for the dead recently given Sony's much-speculated entry into lower-cost LCD TV market.

I have really nothing to add here. I think the stock goes to $1.35-$1.40. Today.

Comments

[Ben Around:]

Now if they just issue the financial reports we might get the monkey off our back.

The shorts better remember;
When you shorta stock your best outcome is 100% gain if the company goes BK.
Your loss is unlimited if the stock starts going up.

LOOK At the PPS now.

2008 Apr 22 10:09 AM

[buyforeclos...:]

Stock is a dog... sucker rally

2008 Apr 22 10:24 AM

[CT Programmer:]

The stock IS a dog right now. But long term its got the potential to go higher. They are a bargain brand that has received quite a few good reviews of their products, and their management (slowly) is getting its act together. The recovery will be in spurts like this where fewer and fewer people think its a dog and it starts its march upwards. By the time anyone thinks a stock is no longer a dog, most of the big money has already been made, although I'm sure they'll short it now in the hopes that time will drag on this boost and wear it down, especially with negative "news" (i.e.; Sammina) reports outweighing positive ones by about 5-to-1. Besides, its trading well below its book value right now. This has more upside than downside.

2008 Apr 22 10:41 AM

[Loren Paz:]

You know what they say, every dog has its day.

By the way, the "book value" based on the released financial statements should not be used. Even the company itself said not to rely on them since they have to restate earnings.

When current and accurate financials are release, then there is a much clearer picture on the company for better or for worse.

2008 Apr 22 04:05 PM

[Buy BRLC:]

Where is old Samuel Sanmina now? Notice that guy is nowhere to be found. Loser. Wrong again.

2008 Apr 22 05:08 PM