nLIGHT Stock Tanks on Inaugural Sell Rating

One analyst expects LASR to lose nearly half its value

Aug 28, 2018 at 10:31 AM
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Semiconductor diode laser specialist nLIGHT (NASDAQ:LASR) is in the red this morning, with the stock down 2.2% at $30.49 after Benchmark started coverage with a "sell" rating and a $17 price target. It's the first "sell" recommendation for LASR since the shares made their public trading debut back in late April, and that price target -- well below the Wall Street mean of $37.14 -- implies expected downside of 45.5% to LASR's Monday close at $31.19.

"While LASR has executed well since its [initial public offering (IPO)], the stock trades at a significant premium to its peer group, trades nearly double the April IPO price, and we believe the shares may be priced for perfection," wrote Benchmark analyst Mark Miller in a note to clients. Among a number of "yellow flags" for LASR he believes "investors may be ignoring," Miller pointed to a maturing fiber laser market, the company's "questionable" ability to compete on price over the long term, and the impact of tariffs on China.

It's still early in the session, but it's interesting to note that LASR has recovered from the worst of its lows after bottoming around $28.38. Previously, $28.30 marked the stock's IPO-day high, but the $28 region has more recently been emerging as tentative support over the past month.

Overhead, another significant price point to watch for LASR is at $32. This represents a double of the stock's $16 IPO price, and it also coincides with a 20% pullback from LASR's all-time closing high of $40.90, set on July 17.

Meanwhile, short sellers have been slowly but steadily building their bearish stake on LASR. Short interest now accounts for 3.8% of the equity's float, or 4.4 times the equity's float.

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