These three emerging tech stocks have hit the fallers list this week, all sitting in the red on the S&P/ASX 200 at the time of writing, while telco cousin Telstra Corporation Ltd (ASX: TLS) takes out the place of top gainer. So does this mean there are buying opportunities afoot for the savvy investor? I’ll break it down below. Speedcast International Ltd (ASX: SDA) Shares in $1.14 billion market cap satellite communication company Speedcast International dropped from $6.71 on August 27, to $3.97 by August 30 off the back of the release of its half-yearly report. The market responded in-kind…
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These three emerging tech stocks have hit the fallers list this week, all sitting in the red on the S&P/ASX 200 at the time of writing, while telco cousin Telstra Corporation Ltd (ASX: TLS) takes out the place of top gainer.
So does this mean there are buying opportunities afoot for the savvy investor?
I’ll break it down below.
Speedcast International Ltd (ASX: SDA)
Shares in $1.14 billion market cap satellite communication company Speedcast International dropped from $6.71 on August 27, to $3.97 by August 30 off the back of the release of its half-yearly report.
The market responded in-kind to Speedcast lowering its full-year guidance, which saw Morgans downgrade the stock from an add to a hold and reduce its price target to $4.09.
But drilling down into the results, Speedcast’s report wasn’t all doom and gloom.
Group revenue grew by 24% to US$304.9 million from $246.3 million in the previous corresponding period, with underlying EBITDA growing 14% to US$60.4 million and underlying NPATA up 37% to US$21.1 million.
While net debt did increase from US$388 million at December 31 2017, to US$430 million at June 30 2018, that is to be expected from an emerging company, and comes as a result of investment in growth including debt refinancing costs and US$20 million for the UltiSat acquisition earnout.
While investors may be disappointed FY18’s underlying EBITDA guidance is in the range of US$135 million to US$145 million this downgrade can be attributed in part to a drop in energy revenue due to the delayed recovery in the offshore energy sector – but its Martime division is on the rise with Speedcast also netting strong operating cash flows.
Plans to acquire Globecomm Systems Inc for an estimated net purchase consideration of US$135 million, on a cash & debt free basis should strengthen Speedcast’s global position in Government, Maritime and Enterprise and complements last year’s acquisition of UltiSat.
Synergies should only mean good things for the future and come at a time when government spending globally is expected to rise.
Speedcast shares had a small rally yesterday but are lower today – down 5.6% to $4.45 at the time of writing.
Afterpay Touch Group Ltd (ASX: APT)
Shares in payment platform provider Afterpay Touch Group Ltd have tanked by 4.5% to $15.96 at the time of writing in the first set of declines the company has experienced in the last 12 months.
Afterpay’s share price hit the skids on August 27 despite no real news out of the company since its FY18 results presentation on August 23.
If you’ve been struggling to find a time to buy into Afterpay this might be your opportunity, with its plans to acquire 90% of UK business Clearpay for 1 million shares looking as if they will bode well for the company after a recent announcement it had raised $117 million via an institutional placement at $17.05 per share.
Entering the UK’s ecommerce market appears to be a well-thought out move by Afterpay and should certainly give operations and earnings a boost into the future.
Goldman Sachs has a current buy rating on Afterpay and this may be a good enough sign for many to take the plunge.
Nextdc Ltd (ASX: NXT)
Data centre operator Nextdc is back in the red today, down 3.6% to $6.29, after a series of declines left investors wondering if this $2.23 billion market cap player is a good buy right now.
Morgan Stanley certainly thinks so, with an overweight rating on Nextdc and a $9.20 price target after Nextdc reported a solid set of results on August 31.
While Nextdc would still be considered “high risk” its FY18 performance is hard to ignore, with revenue up 30.6% to $161.5 million, underlying EBITDA increasing 27.7% to $62.6 million and an outlook of 23.8% growth in revenue and 28% growth in underlying EBITDA expected.
While Nextdc did beat its earnings forecasts, some punters would be disappointed by its dip in profits, with NPAT down from $23 million in FY17 to $6.6 million.
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Motley Fool contributor Carin Pickworth owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.