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Emcore (EMKR) Worth Up to $12/Share Based on Sum-of-the-Parts - Needham & Company

October 18, 2013 7:31 AM EDT Send to a Friend
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Price: $4.88 --0%

Rating Summary:
    4 Buy, 0 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
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With the company attracting activist investors, Needham & Company analyst Alex Henderson said he thinks EMCORE (NASDAQ: EMKR) is worth $9-$12 in a sum-of-the-parts break-up even after applying a 30% discount.

"With the recent filing of a ~9% position by an activist shareholder group, the future of Emcore could be shaped by investors looking to realize the underlying value of the sub-segments of the company," Henderson comments. "Our investment thesis on Emcore has always had two elements to it. First, we think that if the company can clean up its act, there is good value here. Second, we think the company should be split into pieces to realize the underlying value since there is little overlap among the units."

"So what might EMKR be worth in a sum of the parts?", the analyst asks. "Our conclusion is it is worth a lot more than today’s valuation. We estimate a value in the $9-15 range. On a full company basis we believe this is not an unreasonable target if they can get their act together, and on a break-up value, we think this would be quite achievable."

Here's how they break it down:
Here’s how:
1. Space Solar: $6.66-8.40
2. Cable: $3.18-4.00
3. Optical Telecom: $3.18-4.00
4. Combined: $13-16.40—Hair cut by 30% results in $9.10-11.48 on year-end CY14 estimates and run rates.

The firm maintained a Buy rating an price target of $9 on EMKR.

For an analyst ratings summary and ratings history on EMCORE click here. For more ratings news on EMCORE click here.

Shares of EMCORE closed at $5.16 yesterday.




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