February 15, 2007

$17.65 Target on Raydene

Zacks has a quick blurb on Raydene:

After falling over 10% today, Radyne Corporation (RADN) is now trading at a very attractive valuation, or so says Zacks senior analyst Debra Fiakas, CFA, who covers Radyne and currently gives it a Buy recommendation:

“Radyne landed contracts that slipped from the third quarter 2006, producing year-end sales and earnings within management’s guided range. The Company provides equipment used in the ground segment of satellite systems for the transmission of voice, data, audio and video communications. The Company has a fairly fresh product line with several new products that surpass performance of competitors products.

“Operating expenses appear to be well under control, totaling $10.1 million in the fourth quarter. This compares well to $10.4 million spent in the previous quarter and $9.9 million in the year-ago quarter. For the year operating expenses grew by 29.4% to $39.6 million versus $30.6 million in the prior year. This compares to sales growth of 30.0% year-over-year. Net income was $3.6 million or $0.19 per share in the quarter, bringing EPS for the year to $0.63. Cash flow generated by operations totaled $8.7 million for the year, bringing cash to $27.5 million at the end of December 2006. Equity increased to $101.9 million from $77.6 million, driven by retained earnings and the addition of the Xicom operation.

“We have adjusted our price target to $17.75 based on the reduction in our 2007 EPS [earnings per share] estimate from $0.86 to $0.71. This assumes RADN is fairly valued at a P/E [price-to-earnings]-to-growth (PEG) ration of about 1.0, based on our projected five-year growth rate of 25%.”

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