News Analysis date published New: 
Thursday, July 15, 2010 - 11:56
New Date created: 
Thursday, August 15, 2013 - 04:51
New Date last updated: 
Thursday, July 15, 2010 - 11:56

Thursday Losers: OPNET, Key Energy Services and Kulicke & Soffa

Thursday, July 15, 2010 - 11:56am

Among the biggest losers in Thursday's early trading are OPNET (Nasdaq: OPNT), Key Energy Services (NYSE: KEG) and Kulicke & Soffa (Nasdaq: KLIC).

Top Percentage Losers --Thursday, July 15, 2010
Company Name (Ticker) Intra-Day Price Intra-Day
% Loss
52-Week High 52-Week Low
OPNET (Nasdaq: OPNT) $13.75 -13.5% $17.72 $7.50
Kulicke & Soffa
(Nasdaq: KLIC)
$7.35 -8.0% $9.58 $3.23
Key Energy Services
$8.91 -6.2% $11.54 $5.77

*Table includes companies with minimum market capitalizations of $200 million and three month trading volumes of at least 100,000 shares. All percentage returns are listed as of 11:40AM Eastern Standard Time. Click on ticker symbols for up-to-the-minute price quotes and percentage gain data.

OPNET Lower on Weak Quarterly Results

Shares of OPNET (Nasdaq: OPNT), a provider of network management software, are off by double digits this morning as the company pre-announced weak fiscal first-quarter sales and profits on Wednesday evening. The company cited a series of one-time events that led to the shortfall, but reiterated full-year guidance.

Shares had been climbing steadily during the past 52 weeks, thanks to successively strengthening quarters, although that trend is now broken. And unless the company can meaningfully boost sales during the next few quarters, full-year sales growth will appear lacking: OPNET may be headed for its third straight year of sales in the $125 million range. Analysts' forecasts for $142 million in sales now look too optimistic.

Action to Take --> Shares are supported by a $104 million cash balance, which is roughly 30% of the stock's value. But with sales and profits looking once again to be flat with prior year results, and shares trading for more than 25 times likely downwardly revised estimates, shares look like dead money for awhile. Investors will need to see several quarters of sustained growth before once again considering this to be a growth story.


Mexico's Energy Crisis hits Key Energy Services

One of the little-discussed topics in the energy world is the steepening declines in output in Mexico's main energy fields. The Mexican government counts on a great deal of revenue from its national oil giant, PEMEX, and economists are growing concerned that this proverbial well is about to dry up.

That sentiment was underscored by Key Energy Services (NYSE: KEG), which provides a range of drilling services to PEMEX and other oil and gas giants. Key noted that "In June, PEMEX notified us of further budget cuts in its North Region." The only reason to cut budgets is because projected output of oil and gas is declining. Shares of Key Energy are off more than -6% in Thursday trading.

Key Energy recently sold some key assets in a bid to reduce high debt levels, which should have the effect of sharply reducing year-over-year sales comparisons. We'll have to wait two weeks for the company's full quarterly update.

Action to Take --> This news may be the canary in the coal mine for Mexico-related energy exploration. Mexico is the second largest exporter of oil and gas to the United States (after Canada), and problems at our neighbor to the south would certainly impact the energy picture in the United States.


Not all Good News in Chip Land

Tech stocks -- and semiconductor stocks in particular -- have had a nice relief rally this week thanks to Intel's (Nasdaq: INTC) strong quarterly results, and a bullish mid-quarter update from Applied Materials (Nasdaq: AMAT). But not all stocks are in favor. Kulicke & Soffa (Nasdaq: KLIC), which sells a range of chip-equipment production tools, is slumping sharply for the second straight day after the company disclosed in an 8-K filing Wednesday morning that some key customers have deferred orders.

Action to Take --> Investors shouldn't read too much into this as relates to the broader sector. Kulicke & Soffa's revenue streams are especially erratic. Sales fell at least -20% in four of the past five years, though they are on track to be up sharply this year. Shares have staged a remarkable rebound, but the fact they still trade for less than five times projected fiscal (September) 2010 profits tells you that investors don't expect the sales rebound to extend much further. There are other tech-focused companies that post much less erratic results, and thus are worthy of a higher price-to-earnings ratio (P/E).

David Sterman does not personally hold positions in any securities mentioned in this article.
StreetAuthority LLC does not hold positions in any securities mentioned in this article.

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