TeleNav Jumps After Analyst Boosts Price Target, Pact With Ford

Shares of connected car and location-based platform services company Telenav (TNAV) are surging after the company reported quarterly financial results as well as a new pact with a major automotive customer. Research firm Craig-Hallum followed up this morning with positive comments.

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SECOND QUARTER EARNINGS: Telenav reported a Q2 loss per share of (26c) on revenue of $52M. The company's Q4 EPS missed analyst expectations for a smaller loss per share of (11c) but revenue for the quarter surpassed analysts' view of $51.37M.

MANAGEMENT COMMENTARY: CEO HP Jin pointed out that Q2 revenue grew 15% year-over-year to $52M and billings growing 23% year-over-year to $59.7M. "We continued to make solid progress towards the GM (GM) launch of our embedded and connected navigation solution which we expect to occur in the next couple of months. We also announced an additional award with Toyota (TM). We are excited to see the relationship with Toyota continue to deepen and are pleased that Scout GPS Link was chosen to be in select 2018 Toyota vehicles equipped with Entune 3.0. We believe our partnerships with global auto OEMs, ranging from brought-in solutions to embedded and connected solutions, is a testament to our broad capabilities and market leadership," the CEO added.

FORD AGREEMENT: With its Q2 financial report Telenav announced that it entered a pact with Ford (F) to provide its MapCare solution in conjunction with its embedded navigation product for the European region.The agreement begins in the third quarter of 2017.

GUIDANCE: Looking ahead the company guided to a deeper third quarter loss than expected on revenue that was lower than average analyst view. Telenav said it sees a Q3 per share loss of (30c)-(28c) on revenue of $37M-$39M. Consensus views for Q3 were for a loss of (16c) on revenue of $48.89M. Billings are expected to be $60M-63M and gross margin is expected to be approximately 48%.

ANALYST PERSPECTIVE: Wednesday morning, in a note to investors, Craig-Hallum analyst Steven Dyer raised his price target for TeleNav to $14 from $9 given the company's strong balance sheet, long-term contracts, inexpensive valuation and impending revenue ramp. The analyst reiterated a Buy rating on the shares.

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Disclosure: None.

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