I Am Upgrading My Price Target For Kopin Heading Into The Consumer Electronics Show 2018

| About: Kopin Corporation (KOPN)

Summary

My previous target of $4.50 per-share was reached in September of 2017.

CES 2018 will be a major catalyst for Kopin and cause analysts to revise their estimates upward.

Two large transactions in 2017 tell us there is upside from current share price levels.

Since early 2015, I have consistently advocated a $4.50 per-share intrinsic value for Kopin (KOPN) based on cash on-hand and their massive wearables IP portfolio with over 300 patents. Validating my forecast, Kopin traded at $4.52 per-share on September 19, 2017, although it has since turned south and closed at $3.35 per-share on November 24, 2017.

Despite the recent weakness, I now believe Kopin is about to fly right past $5.00 per-share following the Consumer Electronics Show (CES) in January. In fact, I believe the market will start to value Kopin as a $7.00 to $10.00 stock in 2018 once the company’s massive wearable revenue growth opportunity is finally digested by analysts. Here’s why:

Five New AR/VR Headsets Will Be Shown At CES

As stated in their Q3 2017 quarterly release, five new AR/VR headsets will be shown at CES with Kopin wearable technology components inside. A new version of the Solos cycling AR smartglasses is one. I believe we may see a mobile VR headset with their new OLED micro displays as a result of the Goertek partnership. Additionally, we will likely see the first Whisper noise cancellation headset design wins with one or more customers. The unveiling of several headsets from customers will finally mark the beginning of a wave of new AR and VR business for Kopin – hopefully with large Consumer Electronics companies as those customers.

Enterprise AR Dominance

As I have written about extensively, Kopin is inside all volume shipping head-worn Enterprise AR devices from Google, RealWear, Scott Safety, Fujitsu and Vuzix among others. It is clear that AR will succeed in the enterprise segment before we see broad adoption in the consumer space. Kopin has demonstrated that they are dominating this space with key early design wins for their AMLCD micro displays, unique optics, and Whisper noise cancellation chip. Look for Kopin to realize $50-$100 per unit in revenue as shipments ramp from the aforementioned companies. Con census is that total enterprise AR unit shipments will ramp into the millions by 2020 and I see Kopin benefiting disproportionately.

Significant Transactions By Those "In The Know"

In January of 2017, Goertek took at 10.1% stake in Kopin at a price of $3.25 per-share. For those who are not aware, Geortek is the largest Original Device Manufacturer of VR and AR headsets in the world. Many consider Goertek to be the “FOXCONN of wearables.” Major Consumer Electronics companies already use Goertek to design and manufacture VR headsets. The reason Goertek has partnered with, and invested in, Kopin is to access the full suite of AMLCD & OLED micro display, optical, and Whisper noise cancellation technology that Kopin offers. Geortek and Kopin have already designed a mobile VR headset called “Elf” which uses Kopin’s new OLED micro display technology.

In addition to Goertek’s investment, the company’s CEO Dr. John Fan purchased 250,000 shares at $3.21 per-share on November 9, 2017. I see this sizable purchase by the CEO as further validation that Kopin’s share price is likely undervalued at current levels.

These two large transactions by industry insiders tell us that there is significant upside from $3.25 per-share.

Long term, I see Kopin trading north of $20.00 per share once revenue starts to ramp with broad AR and mobile VR adoption. Millions of AR and VR devices will ship annually with Kopin technology inside at that point. On the path to that valuation, I see Kopin trading between $7.00 and $10.00 following CES.

Disclosure: I am/we are long KOPN.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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