QPC Lasers is focused on designing and manufacturing semiconductor lasers for an array of industrial, medical and defense markets. Its primary advantage is in the innovative designs and manufacturing processes it has developed for high-performance, but inexpensively manufactured, semiconductor laser diodes and related optical components.
Several different technology platforms have been developed by the company, with six issued patents and ten patents pending. The strategic position held poises QPC Lasers to gain market shares with products that specifically address the important issues of laser performance. After research and development efforts, QPC Lasers believes it has improved on the disadvantages of existing technology including high cost of acquisition and operation, large size and enormous weight, inefficiency in the use of electric power, and low brightness.
Surya Gautam, MBA, Analyst for RedChip, stated, “Since QPCI does not have positive earnings, we based our valuation on projected revenues. We closely examined multiples for two closely related industries. The Semiconductor Equipment industry has a price/sales multiple of 2.8x, and the Optical Equipment industry has a price/sales multiple of 3.9x. Based on projected FY 2008 revenues of approximately $17 million and 40 million shares outstanding, we are projecting revenue per share of $0.425. Taking an average P/S multiple of 3.35 for the two comparable industries and applying a projected revenue per share of $0.425, we have developed a 12-month price target of $1.42.”
He concluded, “The semiconductor laser market is projected to be over $6 billion over the next five years. Even if we very conservatively estimate that the Company will capture only 1% of that market share with its revolutionary technology, this would equate to sales of over $60 million. By and large, the Company has great potential to grow, and we project its stock price to more than double in a year from now. Even though the Company does not expect to have an annual operating profit until FY 2009, we cannot overlook its sound growth potential. We are assigning a “Buy” rating to QPCI.”
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