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Alexander Choi
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  • Was Adept Technology Oversold? 0 comments
    Aug 29, 2014 12:27 PM | about stocks: ADEP

    Earnings Call Summary

    CEO Rob Cain of Adept Technology Inc. (NASDAQ:ADEP) explained how fiscal year 2014 was a year of improvement in the most recent earnings call. The company was able to stabilize business, lower its breakeven point, and introduce new products in the fiscal year-end earnings call. Adept Technology generated revenues of $14.3 million and had a gross margin of 46% in 4th Quarter this year. These number are higher compared to the 4th Quarter last year. Revenue for the entire year was $57.5 million, which is an increase of 23% over the prior year. Cash and cash equivalents were $7.6 million, which is an increase of $1.3 million last year.

    Management is optimistic about the number of initial orders from new mobile customers this quarter. Unfortunately, there wasn't much good news coming from the North American market. North America had lower growth this quarter and this is a trend management needs to reverse.

    Reason for Dip

    The company had a loss of about 0.02 per share for the 4th quarter. This missed analysts estimates by 4 cents. Revenue this quarter was $14.3 million, again missing analysts' estimates of $16.22 million. The market punished ADEP, slashing their stock price down 19.05%.

    Looking Forward

    Adept Technology believes the bulk of its opportunity lies in Asia and Europe. The company has been struggling in North America but steps are being taken to improve their position in this market. During the earnings call, CEO Rob Cain emphasized that they have little tolerance for losing money. However, investors are reminded that as the company is preparing for growth and that losses that will remain modest in the future. Adept Technology's goal is to reach $200 million in revenue sometime in the next 4-6 years.


    I believe that Adept Technology was oversold after its earnings call. The stock was down about 19% at the end of the day on August 26, 2014 and closed at a price of $9.01. In this industry, there is a lot of research and development involved and it may take some time before the company has something to show for it. On the bright side, net loss was $339,000 this year as opposed to $10,025,000 last year. This marks a huge improvement and the company is on the right track. Analysts still expect EPS to grow significantly in the future. Despite the bad news, some analysts believe that this is a huge opportunity. Dougherty and Company changed their rating on ADEP to buy after the earnings call as they too believe the market overreacted.

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Themes: ADEP, Robotics, Oversold Stocks: ADEP
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