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Neonode Inc

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Neonode Q1 preview: Approaching break-even

On May 9, we expect Neonode to report Q1’17 sales and EBIT of USD 3.7 and -0.1 million. If the report came in at these levels it would mean a sales growth of 18 percent and a decrease in the operating loss from last year’s USD -1.3 million. We assume the approaching of break-even would lead to a significant, positive share price reaction as it would neutralize some of the stock market's distrust from previous missed targets etc.

Q1 has been a relatively calm period and consequently the shares have been trading down since the beginning of the year although the last few days actually has erased most of the share price decline YTD. Following the end of the quarter it was announced as expected, that the AirBar is now available through Dell.com. As previously mentioned though, our belief is that the stock market has a shorter horizon than us and puts too much emphasis on the AirBar, which has had a slower ramp-up than expected. Our take is instead that the growth will be supported by the strong position in automotive and therefore we are paying extra attention to details around automotive in the report.
 
We reiterate our base and bear case of USD 1.6 and 3.7 respectively and thus see a profound margin of safety at the current share price levels.  

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