“Cut-to-the-Chase” Recommendations
- Week Beginning -
Monday, January 08, 2018

by Ian Harvey

IMPORTANT NOTE: There is no stop-loss or pre-determined sell price recommended – this is left to the discretion of the individual trader.

Option Trade - Xerox Corp (NYSE:XRX) Calls

Friday, January 12, 2018

** OPTION TRADE: Buy the XRX FEB 16 2018 33.000 CALL at approximately $0.66.

Sell price is left to your own judgment.

Xerox Corp (NYSE:XRX) is reportedly in talks to team up with Japanese camera maker Fujifilm Holdings. According to the Wall Street Journal, the copy specialist is under pressure from Carl Icahn -- its largest stakeholder -- to modernize, with the activist investor warning in an open letter to shareholders last December that XRX could end up like Eastman Kodak. Icahn owns a stake of roughly 9.7 percent, according to Eikon data.

And while the two companies have been in a joint photocopy venture for more than five decades, speculation surrounding the latest deal includes rumors of new leadership at Xerox.

The duo is discussing an "array" of potential transactions, including a change of control at Xerox. However one source told the newspaper a complete takeover was off the table.

Fujifilm is a natural partner, given that the two companies already operate together in Asia and Australasia via a 75-25 joint venture called Fuji Xerox.

Fujifilm shares fell 1.5 percent by mid-morning in Tokyo on Jan. 11, to 4,737 yen per share.

Fujifilm has a market value of nearly $19 billion, excluding treasury stock, while Xerox is worth close to $8 billion. The two companies have a Tokyo-based joint venture, Fuji Xerox, which is 75 percent owned by Fujifilm.

Analysts and Hedge Funds Opinions

UBS restated a “hold” rating and issued a $34.50 price objective on shares of Xerox in a research note on Tuesday, December 5th.

Several other analysts have also recently commented on the company…..

  • Zacks Investment Research upgraded shares of Xerox from a “sell” rating to a “hold” rating in a research report on Tuesday, October 31st.
  • Barclays reiterated an “equal weight” rating and set a $35.00 target price (up previously from $33.00) on shares of Xerox in a research report on Tuesday, September 12th.
  • Finally, ValuEngine upgraded shares of Xerox from a “hold” rating to a “buy” rating in a research report on Friday, September 1st.

Shares of Xerox Corp have received a consensus recommendation of “Buy” from the twelve brokerages that are presently covering the stock. Three analysts have rated the stock with a hold rating and eight have assigned a buy rating to the company. The average price target among brokers that have issued a report on the stock in the last year is $35.50.

Institutional investors that have recently made a change to their positions in the stock….

  • AXA lifted its stake in Xerox by 0.8% in the third quarter. AXA now owns 1,450,006 shares of the information technology services provider’s stock valued at $48,270,000 after buying an additional 11,385 shares in the last quarter.
  • Neuberger Berman Group LLC raised its holdings in shares of Xerox by 10.0% in the third quarter. Neuberger Berman Group LLC now owns 58,328 shares of the information technology services provider’s stock valued at $1,942,000 after purchasing an additional 5,316 shares during the last quarter.
  • California Public Employees Retirement System raised its holdings in shares of Xerox by 1.8% in the third quarter. California Public Employees Retirement System now owns 714,372 shares of the information technology services provider’s stock valued at $23,781,000 after purchasing an additional 12,484 shares during the last quarter.

Summary

The rumors are being well received on Wall Street, with XRX stock up 4.5% to trade at $31.71 yesterday. Since skimming its most recent low of $27.55 in mid-November, XRX stock has added 15%.

Analysts, meanwhile, expect the stock to surge to levels not seen since early 2015, with the security's average 12-month price target docked at $37.31 -- a 17.5% premium to Xerox stock's current price.

The shares have certainly been prone to big moves in recent months, though, per XRX's 60-day historical volatility of 23.1% -- docked in the 73rd annual percentile.

Xerox has consistently made bigger-than-expected moves over the past year, relative to what the options market has expected.

Xerox has a current ratio of 1.63, a quick ratio of 1.33 and a debt-to-equity ratio of 0.97. Xerox has a 12-month low of $25.84 and a 12-month high of $37.08. The company has a market cap of $7,548.48, a P/E ratio of 8.82 and a beta of 1.12.

Option Trade - Delta Air Lines, Inc. (NYSE:DAL) Calls

Wednesday, January 10, 2018

** OPTION TRADE: Buy the DAL FEB 16 2018 57.500 CALL at approximately $0.65.

Sell price is left to your own judgment.

Airline stocks are likely to report better-than-expected earnings per share in the fourth quarter of 2017.

The overall sentiment pertaining to airlines is quite positive ahead of the earnings season. This is because airline stocks seem to be back in favor after struggling for most of 2017 due to multiple headwinds like the back-to-back hurricanes and unit revenue issues, among others.

The fourth-quarter earnings season will be kicked off by Delta Air Lines, Inc. (NYSE:DAL).

The GOP's tax-cut package, ticket prices and, naturally, those targets seem likely to be focal points for investors. On Tuesday, Bank of America Merrill Lynch said the tax cuts are likely to boost business travel, helping Delta, United Airlines (UAL) and American Airlines (AAL).

As for Q4 itself, Wall Street expects Delta to report earnings per share of 90 cents, up 10%, on revenue of $10.16 billion, a 7% increase. That top-line gain would mark the biggest increase since Q3 2014. The Earnings Whisper number is $0.95 per share.

Delta last week said it expected a roughly 4% increase in passenger unit revenue during the quarter, which would be its best showing all year in the key metric. The company expects adjusted operating margin of around 11%.

After United flat-out terrified investors in October following a murky 2018 financial forecast and shares of American and others retreated on a mixture of worries about too much expansion and rising costs, Delta has remained "the go-to legacy airline," Morgan Stanley analyst Rajeev Lalwani said in a research note last week.

He cited the carrier's 2018 profit and the cost targets it outlined last month at its investor day — EPS of $5.30-$5.70 and unit cost growth of flat to up 2% along with the potential lift from the GOP's tax reform — as reasons to like the airline.

Influencing Factors

Any brighter outlook from Delta, however, would follow a fourth quarter in which the carrier had to cancel some 1,400 flights following an outage at its Atlanta hub, denting its pretax income by an amount expected to be somewhere between $25 million and $50 million. The company will take a one-time charge of $150 million to $200 million from the tax cuts, which have had the effect of lowering the value of some assets on large corporations' books.

Still, the carrier said it expected to see positive unit revenue in all its markets globally, after discounting from low-cost, long-haul European carriers, a stronger dollar and economic difficulties weighed on those results in years past.

Delta also has tried to broaden its international coverage through joint ventures. It agreed to form one last month with Canada's WestJet — and management could offer more details on that front.

Moreover, Delta has been the "most rational" in competing with ultra-low-cost carriers, JPMorgan's investment thesis on the company says. Dirt-cheap fares from Spirit Airlines and others have, at times, tempted the bigger carriers into matching them on price, whittling away profits and aggravating investors.

"Delta is often cited as the peer leader in terms of capital allocation and execution, and we believe investors will continue to take notice," JPMorgan analyst Jamie Baker wrote.

Tax reform is a factor that could boost Delta Air Lines stock this year. At its investor day last month, the company disclosed that a reduction in the statutory corporate tax rate from 35% to 20% would boost its estimated 2018 EPS by $1.00-$1.25. The statutory rate has been set at 21%, so Delta will get most of that projected savings.

In addition, the tax reform bill creates incentive for capital spending by allowing companies to fully write off capital expenditures for the next five years. That's great timing for Delta, which is in the early innings of a major fleet renewal project.

As a result, Delta probably won't owe any cash taxes until 2020, a year later than previously expected. Even then, its cash tax rate will probably be just 12%-15%. Delta should have more cash freed up to spend on dividends and share buybacks in the next few years.

Analysts and Hedge Funds Opinions

J.P. Morgan analyst Jamie Baker said in November, Delta will likely beat all major U.S. airlines in unit revenue growth in 2018.

J.P. Morgan has an "outperform" rating and $68 price target for DAL stock.

Vetr upgraded shares of Delta Air Lines from a strong sell rating to a sell rating in a research note published on Wednesday. They currently have $49.97 price objective on the transportation company’s stock.

Several other analysts have also recently commented on the company…..

  • Imperial Capital raised shares of Delta Air Lines from an in-line rating to an outperform rating and set a $63.00 price target for the company in a research report on Thursday, October 12th.
  • Stephens set a $67.00 target price on Delta Air Lines in a report published on Monday, December 18th. The firm currently has a buy rating on the transportation company’s stock.
  • Cowen boosted their target price on Delta Air Lines from $62.00 to $66.00 and gave the company an outperform rating in a research note on Friday, December 15th.
  • Finally, ValuEngine upgraded Delta Air Lines from a buy rating to a strong-buy rating in a research note on Friday, December 1st.

Two analysts have rated the stock with a sell rating, one has assigned a hold rating, sixteen have assigned a buy rating and one has given a strong buy rating to the stock. Delta Air Lines currently has a consensus rating of Buy and a consensus price target of $68.12.

Institutional investors that have recently made a change to their positions in the stock….

  • Atlantic Trust Group LLC boosted its holdings in Delta Air Lines by 3.9% in the 3rd quarter. Atlantic Trust Group LLC now owns 126,068 shares of the transportation company’s stock valued at $6,079,000 after purchasing an additional 4,699 shares in the last quarter.
  • Investec Asset Management LTD acquired a new position in shares of Delta Air Lines in the 3rd quarter valued at approximately $157,977,000.
  • TIAA CREF Investment Management LLC boosted its position in Delta Air Lines by 77.6% during the 2nd quarter. TIAA CREF Investment Management LLC now owns 5,364,934 shares of the transportation company’s stock worth $288,312,000 after acquiring an additional 2,343,531 shares during the last quarter.
  • PointState Capital LP acquired a new position in Delta Air Lines during the 2nd quarter worth approximately $106,866,000.
  • Finally, Parametric Portfolio Associates LLC raised its stake in Delta Air Lines by 140.9% in the 2nd quarter. Parametric Portfolio Associates LLC now owns 2,414,031 shares of the transportation company’s stock valued at $129,730,000 after acquiring an additional 1,412,117 shares during the period.
Summary

DAL shares are currently trading just shy of their all-time high, and with a P/E of just 11.2, there appears to be plenty of value left in the stock. The recent tax law changes could lead to more discretionary income in the pockets of Americans, which could be used on more travel, so Wall Street remains very bullish on the company.

Delta Air Lines, Inc. has a 52 week low of $43.81 and a 52 week high of $56.84. The company has a quick ratio of 0.36, a current ratio of 0.43 and a debt-to-equity ratio of 0.54. The firm has a market capitalization of $39,910.00, a price-to-earnings ratio of 11.22, and a price-to-earnings-growth ratio of 1.78 and a beta of 1.30.

Option Trade - Comcast Corporation (NASDAQ:CMCSA) Calls

Wednesday, January 10, 2018

** OPTION TRADE: Buy the CMCSA FEB 16 2018 42.500 CALL at approximately $0.70.

Sell price is left to your own judgment.

Headquartered in Philadelphia, PA, Comcast Corporation (NASDAQ:CMCSA), a media and technology company, is expected to report earnings on Wednesday, January 24, 2018 before the market opens. The report will be for the fiscal Quarter ending Dec 2017. Based on 17 analysts' forecasts, the consensus EPS forecast for the quarter is $0.48. The reported EPS for the same quarter last year was $0.44.

Comcast Corporation has been trading in a bullish manner, based on the relative positions of the stock’s 20 and 200 day moving averages. In the last month, the price of CMCSA has increased +6.84%.

Comcast stock is supported by pretty great numbers. Net income for the trailing twelve months was almost $10 billion. This comes off of fiscal year 2016's $8.7 billion. Cash flow is what cable is all about and Comcast stock has terrific cash flow. Operating cash flow rose from $16.9 billion in FY14, to $18.8 billion in FY15, to $19.2 billion in FY16. That's tremendous!

Free cash flow has been pretty stable at $9.5 billion. As operating cash flow increased, so did capital expenditure (capex).

CMCSA stock is also reasonably valued, trading at 8.8 time enterprise value to EBITDA.

Influencing Factors

Things changed in the past 20 years, as cable distributors went after content providers, such as when Comcast bought NBC-Universal. That has helped Comcast stock become more diversified.

Its cable network subsidiary owns a bunch of solid, if unspectacular, channels including USA, MSNBC, E!, Syfy, CNBC, Bravo, NBC Sports, Golf Channel, Oxygen, Sprout, Esquire, Chiller, CNBC World, Universal HD and Cloo.

The cable network subsidiary generates about 14% of revenues and about one-sixth of all operating income.

The broadcast TV subsidiary has NBC and Spanish-language Telemundo, which brings in about 13% of revenues and just about 7% of operating income.

Comcast, because of the Universal and Dreamworks Animation purchases, also has a substantial studio business. As big as these operations are, particularly Universal, they offer about 9% of revenues, and 4% of operating income.

Comcast stock traditionally has been a solid grower, with adjusted EPS growing 7% last year and forecast to grow an impressive 18% this year.

The Comcast business also has a reasonable amount of diversification, with roughly 30% of profit coming from outside the communications business.

The NBCUniversal entertainment unit might seem at risk in a media landscape increasingly dominated by streaming services like Netflix, Inc. (NASDAQ:NFLX), Hulu, and Amazon.com, Inc. (NASDAQ:AMZN). But it, too, is growing, with revenue excluding the impact of the Olympics up a solid 12.5% through the first three quarters of 2017.

Analysts and Hedge Funds Opinions

Comcast had its target price hoisted by equities researchers at Morgan Stanley from $44.00 to $50.00 in a research note issued on Tuesday. The brokerage presently has an “outperform” rating on the cable giant’s stock. Morgan Stanley’s price objective would suggest a potential upside of 22.40% from the stock’s current price.

Also on Tuesday, Comcast had its price target raised by analysts at Evercore ISI from $44.00 to $48.00. They now have an "outperform" rating on the stock. 18.6% upside from the current price of $40.48.

Several other analysts have also recently commented on the company…..

  • Moffett Nathanson reiterated a “buy” rating on shares of Comcast in a research note on Monday, October 16th.
  • Buckingham Research started coverage on shares of Comcast in a research report on Monday, November 20th. They set a “buy” rating and a $48.00 target price on the stock.
  • Pivotal Research reaffirmed a “buy” rating and set a $50.00 target price on shares of Comcast in a research report on Tuesday, December 19th.
  • Finally, Wells Fargo & Co restated a “buy” rating and set a $49.00 target price on shares of Comcast in a research report on Monday, October 23rd.

One analyst has rated the stock with a sell rating, two have given a hold rating and twenty-seven have given a buy rating to the company. The stock presently has a consensus rating of “Buy” and a consensus target price of $46.15.

Institutional investors that have recently made a change to their positions in the stock….

  • Janus Henderson Group PLC lifted its stake in Comcast by 1,581.1% in the 2nd quarter. Janus Henderson Group PLC now owns 28,199,798 shares of the cable giant’s stock valued at $1,097,544,000 after purchasing an additional 26,522,368 shares during the last quarter.
  • Vanguard Group Inc. lifted its stake in Comcast by 2.8% in the 2nd quarter. Vanguard Group Inc. now owns 316,845,966 shares of the cable giant’s stock valued at $12,331,646,000 after purchasing an additional 8,677,771 shares during the last quarter.
  • Capital International Investors lifted its stake in Comcast by 23.3% in the 3rd quarter. Capital International Investors now owns 34,256,110 shares of the cable giant’s stock valued at $1,318,175,000 after purchasing an additional 6,467,802 shares during the last quarter.

Summary

Comcast has a twelve month low of $34.78 and a twelve month high of $42.18. The firm has a market cap of $191,110.00, a price-to-earnings ratio of 19.27, a P/E/G ratio of 1.85 and a beta of 1.00. The company has a debt-to-equity ratio of 1.06, a quick ratio of 0.74 and a current ratio of 0.74.

Option Trade - Advanced Micro Devices, Inc. (NASDAQ:AMD) Calls

Tuesday, January 09, 2018

** OPTION TRADE: Buy the AMD FEB 16 2018 13.000 CALL at approximately $0.60.

Sell price is left to your own judgment.

Advanced Micro Devices, Inc. (NASDAQ:AMD), a global semiconductor company, has undergone a dramatic transformation over the past couple of years. It has repositioned itself as a true leader of the design and computing world. That tactic has certainly reaped major dividends for investors.

And now, investors are piling into AMD shares and selling Intel stock after major chip security vulnerabilities were revealed earlier last week, and it totally makes sense.

Enterprises will likely diversify their chip security architecture risk for mission-critical applications by buying more AMD server chips. The company's "architecture differences" have proven immune to the more problematic one of the two disclosed vulnerabilities.

On-top-of-this, there is a slate of new products that began rolling out in early 2017; Advanced Micro Devices is more competitive today than it's been in years. Its Ryzen chips compete with Intel (NASDAQ: INTC) in the PC CPU market, its Vega GPUs go head-to-head with NVIDIA (NASDAQ: NVDA), and its EPYC server CPUs are in the early stages of clawing back market share.

AMD announced a slew of product updates on Monday. The Ryzen family will expand in February with desktop chips featuring integrated graphics, followed by the launch of second-generation Ryzen chips in April. On the graphics front, mobile gamers will have Vega as a discrete graphics option in 2018. It's shaping up to be an eventful year for the perennial underdog.

Influencing Factors

The launch of Ryzen Mobile late last year expanded Ryzen into the laptop market, providing a Ryzen CPU paired with Vega graphics. The missing piece has been desktop chips with built-in graphics. That will change in February when AMD fills in this gap in its lineup.

The first Ryzen APUs, featuring Vega graphics, are expected to be available on Feb. 12. The name of the game here is "good enough" gaming.

Following this launch, AMD plans to refresh its Ryzen lineup with the Zen+ architecture during the second quarter. Zen+ will be built on a 12nm process, compared to the 14nm process employed for the current batch of Ryzen chips. Zen+ is a revision, not a major architectural revamp, so performance improvements won't be earth-shattering.

Big changes will come with the launch of the Zen 2 architecture, probably sometime in 2019. The Zen 2 design is already complete, and AMD promises improvements "in multiple dimensions."

AMD is also expanding its addressable market when it comes to graphics. The company launched its discrete desktop Vega GPUs in August, its re-entry into the high-end graphics card market.

All of these new products are being announced against the backdrop of the ongoing CPU security bug saga.

Analysts and Hedge Funds Opinions

Multiple Wall Street analysts predicted AMD will take advantage of the Intel's security issues.

AMD could use it as "a marketing edge given differing architectures and no vulnerability yet," Mizuho Securities analyst Vijay Rakesh wrote in a note to clients Wednesday.

Intel's high-profit data-center business, which sells server chips to cloud computing providers and enterprises, is the chipmaker's crown jewel.

Rakesh noted that Intel had 99 percent market share of the data-center market, representing a huge opportunity for AMD.

"Longer-term customers could be more motivated to find alternatives at AMD and possibly ARM (CAVM benefits) to diversify the architectural risks," Bank of America Merrill Lynch analyst Vivek Arya wrote Thursday. "AMD appears poised to be the most direct beneficiary."

Any increase will be a boon for AMD because the Wall Street consensus for the company's 2017 estimated sales is just $5.25 billion.

One leading tech industry analyst says the chipmaker will do just that.

"The news of Intel's processor security issue and the potential performance degradation to correct it comes at an inopportune time as Intel currently faces heavy competitive pressure from its long-time nemesis, AMD," Fred Hickey, editor of High Tech Strategist, wrote in an email Thursday. "AMD's new line of chips is a significant challenger for the first time in many years (since AMD's Opteron chip days)."

AMD launched new line Epyc data-center processors to much fanfare last June with design wins at cloud computing providers Microsoft Azure and Baidu.

"For Intel, it likely means loss of market share (lower revenues) as well as loss of pricing power (lower gross margins) as the advantage shifts to the buyers and away from Intel, which has totally dominated the PC/computer server processor market in recent years," Hickey said. "AMD's new processor chips already had momentum and that momentum will likely be propelled further by the recent security issue disclosures."

Several other analysts have also recently commented on the company…..

  • BidaskClub raised shares of Advanced Micro Devices from a “sell” rating to a “hold” rating in a research report on Friday.
  • Susquehanna Bancshares reaffirmed a “neutral” rating and set a $15.00 price target on shares of Advanced Micro Devices in a research report on Wednesday, September 20th.
  • Jefferies Group reaffirmed a “buy” rating and set a $19.00 price target on shares of Advanced Micro Devices in a research report on Friday, November 10th.
  • Loop Capital reissued a “hold” rating and issued a $13.00 price objective (down previously from $14.00) on shares of Advanced Micro Devices in a research report on Wednesday, October 25th.
  • Finally, Macquarie raised shares of Advanced Micro Devices from an “underperform” rating to a “neutral” rating and increased their price objective for the stock from $10.29 to $10.47 in a research report on Monday, December 18th.

Four equities research analysts have rated the stock with a sell rating, seventeen have issued a hold rating, ten have assigned a buy rating and one has given a strong buy rating to the company’s stock. Advanced Micro Devices has an average rating of “Hold” and a consensus price target of $17.73.

Institutional investors that have recently made a change to their positions in the stock….

  • California Public Employees Retirement System increased its holdings in Advanced Micro Devices, by 4.8% in the 3rd quarter. The firm owned 1,522,529 shares of the semiconductor manufacturer’s stock after buying an additional 69,729 shares during the period. California Public Employees Retirement System owned 0.16% of Advanced Micro Devices worth $19,412,000 as of its most recent SEC filing.
  • QUANTRES ASSET MANAGEMENT Ltd boosted its stake in Advanced Micro Devices by 122.1% during the 4th quarter. QUANTRES ASSET MANAGEMENT Ltd now owns 116,600 shares of the semiconductor manufacturer’s stock valued at $1,199,000 after acquiring an additional 64,100 shares during the last quarter.
  • Belpointe Asset Management LLC bought a new position in Advanced Micro Devices during the 3rd quarter valued at $945,000.
  • Finally, Neuberger Berman Group LLC raised its holdings in shares of Advanced Micro Devices by 8.8% during the third quarter. Neuberger Berman Group LLC now owns 76,294 shares of the semiconductor manufacturer’s stock worth $973,000 after purchasing an additional 6,181 shares during the period.

Summary

AMD has a big year ahead of it as it expands its portfolio of products and competes more broadly with both Intel and NVIDIA.

After years of losses, Advanced Micro is looking to turn a profit in 2017. While analysts forecast just 13 cents per share in earnings for fiscal year 2017, that’s up almost 200% year-over-year. They further expect 177% growth in 2018. Revenue growth of 23% in 2017 is forecast to slow to just 12.3% in 2018.

The positive here is that profitability is expanding much faster than revenue, meaning margins are moving in the right direction. If AMD can turn cash flow positive, shares can really start to gain some upside momentum. That should be the case as revenues churn higher and profitability explodes.

Advanced Micro Devices, Inc. has a 12-month low of $9.42 and a 12-month high of $15.65. The company has a quick ratio of 1.20, a current ratio of 1.70 and a debt-to-equity ratio of 2.61. The company has a market cap of $11,230.00, a P/E ratio of -148.50, a price-to-earnings-growth ratio of 6.93 and a beta of 2.47.

Option Trade - Vuzix Corporation (NASDAQ:VUZI) Calls

Monday, January 08, 2018

** OPTION TRADE: Buy the VUZI FEB 16 2018 7.500 CALL at approximately $0.80.

Sell price is left to your own judgment.

Vuzix Corporation (NASDAQ:VUZI) has a long-standing presence as a wearables maker in the enterprise technology market, working with companies such as DHL, Airbus and Bosch.

Vuzix has a prime focus on developing wearable displays with AR for the enterprise workforce. Along those lines, the company is working on internal products like the M300 smart glasses and the Vuzix Blade while working with partners such as Toshiba (OTCPK:TOSBF) to produce customized solutions.

On Friday this stock began its’ upwards trajectory with a lot more to come!

The path to success in bleeding edge technologies such as augmented reality (AR) remains difficult no matter the size of the company. Microsoft (MSFT) has struggled getting HoloLens off the ground and private Magic Leap (MLEAP) finally announced a product that Business Insider seems less than impressed about despite long hyped technology.

This brings the story back to Vuzix Corp. that sits at the intersection of hype and investor questions but has the potential to solve these debates with a strong 2018 based on partnerships and new smart glasses.

The Vuzix Blade smart glasses will be the first powered by Amazon's Alexa, as unveiled at CES 2018 in Las Vegas.Vuzix will unveil a set of smart glasses powered by Alexa this week, as Amazon's smart assistant continues to pose a threat to leading platforms from Apple and Google.

The $1,000 glasses are aimed at a "prosumer" market, such as golfers or business customers, the company said, but will eventually come down in price and incorporate new features.

Voice assistants are key on smaller devices, such as glasses, where swiping is impractical. And Amazon has found a way to tap that market through small companies like Vuzix, which has a market capitalization of just about $186 million.

Vuzix's is one of many augmented-reality products expected out of CES, a consumer electronics trade show taking place in Las Vegas next week.

Augmented reality is a technology that projects computerized images onto a live video image from the real world, while its cousin virtual reality completely embeds the user in a 360-degree computer-generated world.

Depending on their quality, availability and price, these AR products could haunt Apple, which has planned its own smart speaker and is reportedly working on augmented reality glasses. But with Siri's HomePod debut delayed, Alexa seems to be stepping into the augmented reality market.

Influencing Factors

CEO Paul Travers said he's bullish enough on the impact of new augmented reality technologies that he plans to take Vuzix glasses to consumer markets early in the second quarter of this year.

"Our opinion is that if you make something that solves a problem, there's a market for it," he said.

He said that from the early 2000s, clients had requested "Oakley-style" smart glasses, but until recently, it was difficult to package fast processing power into a small hardware package like glasses frames. But coming technologies, particularly 5G internet connectivity and faster processors, will allow more communication between the "edge" of the device and the cloud, enabling advanced technologies such as artificial intelligence to appear on small, thin screens.

The Toshiba deal, as mentioned earlier, is a prime focus of the 2018 opportunity with the company signing a purchase commitment of at least $5 million with Vuzix. The company only produced $1.4 million in sales for Q3, so the size of this deal alone is very material to how Vuzix performs this year.

On top of that, the smart glasses supplier recently completed a six figure deal with a top-5 biopharma company and falls on top of the 350 pilot programs and proof of concepts in the sales pipeline for the M300 smart glasses.

Vuzix keeps moving forward with developing new smart glasses. The Blade smart glasses utilize waveguide optics technology to provide the first AR wearable that looks and feels like actual sunglasses. The Blade won four CES Innovations awards and will be featured at the upcoming CES show this month. TechCrunch suggests that AR technology will get a big push at CES 2018.

The current analyst forecast is for nearly 400% revenue growth in 2018. Even hitting the Q4 revenue target of about $2.4 million would be a huge step in the right direction. The company would nearly double Q3 revenues of $1.4 million.

The market thought Q3 was going to be the break out quarter and that didn't happen due to supposed production issues on the M300 smart glasses. All the pieces exist for hitting the Q4 and 2018 targets.

Analysts and Hedge Funds Opinions

Vuzix was upgraded by Zacks Investment Research from a “sell” rating to a “hold” rating in a research note issued on Tuesday, December 19th.

According to Zacks, “Vuzix Corporation designs, manufactures, and sells display devices that are worn like eyeglasses and feature built-in video screens that enable the user to view video and digital content, such as movies, computer data, the Internet or video games. It produces both monocular and binocular Video Eyewear devices. The Company focuses on consumer markets for gaming and mobile video and on rugged mobile displays for defence and industrial applications. Vuzix Corporation is based in Rochester, New York. “

Separately, Maxim Group restated a “buy” rating and issued an $11.00 target price on shares of Vuzix in a report on Wednesday, September 6th.

Also, Chardan Capital set a $10.00 price objective on Vuzix and gave the company a “buy” rating in a research note on Tuesday, December 26th.

Institutional investors that have recently made a change to their positions in the stock….

  • GSA Capital Partners LLP lifted its position in shares of Vuzix by 261.3% during the 2nd quarter. GSA Capital Partners LLP now owns 38,300 shares of the company’s stock valued at $251,000 after buying an additional 27,700 shares in the last quarter.
  • ETF Managers Group LLC purchased a new position in shares of Vuzix during the 2nd quarter valued at about $236,000.
  • Finally, Vanguard Group Inc. lifted its position in shares of Vuzix by 15.0% during the 2nd quarter. Vanguard Group Inc. now owns 646,120 shares of the company’s stock valued at $4,232,000 after buying an additional 84,127 shares in the last quarter.

Insider News……

Most key insiders including the CEO, CFO, COO, and a Director have recently purchased shares in the open market.

  • Director Edward William Jr. Kay acquired 10,000 shares of Vuzix stock in a transaction that occurred on Wednesday, November 15th. The stock was bought at an average cost of $5.95 per share, for a total transaction of $59,500.00.
  • Also, COO Paul A. Boris acquired 5,000 shares of Vuzix stock in a transaction that occurred on Tuesday, December 19th. The stock was acquired at an average price of $5.74 per share, with a total value of $28,700.00. The disclosure for this purchase can be found here. Insiders have acquired 22,000 shares of company stock valued at $126,930 in the last three months. Insiders own 18.40% of the company’s stock.

The amounts purchased are not massive, but rather a solid signal of faith in the prospects of the smart glasses in production and development.

Summary

The $1,000 glasses are aimed at a "prosumer" market, such as golfers or business customers, the company said, but will eventually come down in price and incorporate new features.

Vuzix has a long-standing presence as a wearables maker in the enterprise technology market but is now looking toward consumers.

Vuzix's is one of many augmented-reality products expected out of CES, a consumer electronics trade show taking place in Las Vegas this week.

Vuzix has all the pieces in place for a solid 2018.

The company remains on the path towards an inevitable inflection point that will reward investors.

Vuzix Co. has a market capitalization of $156.54, a price-to-earnings ratio of -6.95 and a beta of 1.16. Vuzix Co. has a 52 week low of $4.10 and a 52 week high of $7.80.