Superconductor Technologies Inc. (NASDAQ: SCON) Analyst Report

Traders News Source Mission Statement

We strive to highlight the future potential as well as the inherent risk in each small cap company we cover while remaining neutral as a leading third-party equity research firm. Please read our privacy policy and full disclaimer below.

Follow-up to February 6th, 2017 report on SCON.

The original report can be viewed here- https://finance.yahoo.com/news/superconductor-technologies-potential-revolutionize-smart-130000844.html

Superconductor Technologies Inc. (NASDAQ: SCON) is engaged into superconducting innovation. Its Conductus® superconducting wire platform offers high performance, cost-effective and scalable superconducting wire.

The company recently announced its 4th quarter revenue; Scon’s fourth quarter 2016 net revenues were $9,000, compared to $22,000 in the third quarter of 2016 and $27,000 in the fourth quarter of 2015. Revenue for all periods was primarily from legacy wireless products. Net loss for the fourth quarter 2016 was $2.5 million, or a loss of $0.61 per basic and diluted share.

The performance was largely in line with our previous expectations of minimal revenues and an EPS loss, as the company continued to develop manufacturing capability to serve the power sector.

During 2016, SCON designed and implemented performance improvements to its flagship product i.e. Conductus® HTS wire. In fact, it also attained a 20% increase in critical current carrying capacity on its new wire architecture. Additionally, in late February, Scon’s internal testing, delivered results that met specifications for several potential customers. As a result, it recently shipped wire to key customers for final qualification.

***Get our small cap profiles, special situation and watch alerts in real time. We are now offering our VIP – SMS/text alert service for free, simply text the word “Traders” to the phone number “25827” from your cell phone***

Notwithstanding recent muted performance, company is aggressively focusing on attaining final customer approval for one or more applications. In 2017, SCON plans to fulfill existing qualification orders that include three new orders received in the fourth quarter, and ramp production for commercial scale orders.

Additionally, In February 2017, Scon was awarded two patents that protect its unique HTS wire manufacturing capabilities. This invention enables Scon to efficiently monitor the evaporation conditions of multiple source materials used in the vacuum deposition chamber. Moreover, these patents also reinforce the sustainable production advantages of Scon’s HTS wire manufacturing process.

The recent industry and government support for HTS wire manufacturing initiatives confirm the importance of this key enabling technology to surpass the performance limitations of conventional materials and designs.

The company’s stock is on a modest growth path after these positive developments over the past few months about its prospects. In fact, as of our initial coverage during Feb’2017, it was trading at $1.16 and has steadily increased to the levels of $1.6 on March 27th 2017.

About the Company:

SCON is attempting to develop and produce High Temperature Superconductor, or HTS, wire that bears the potential to revolutionize the electric power industry. The properties of HTS allow wire to conduct electricity more efficiently from traditional copper wire through cooling power transmission to “critical” temperatures. SCON markets its patented HTS technology under the brand name Conductus.

Since its inception in 1987, SCON pioneered the development of superconducting materials and manufacturing processes, developing numerous patents as well as proprietary trade secrets and know-how. Now, it is applying its proven and proprietary superconducting deposition techniques and manufacturing experience to the development of cost effective, high performance superconducting wire for emerging large market opportunities with electric utilities and smart grid applications.

Timeline of the company:

 

Unique differentiating factors & key Off-take drivers:

Scon is one of the few companies, who are bidding for large customers such as General Electric (NYSE: GE), Siemens (OTC: SIEGY), and TECO Westinghouse, a subsidiary of Taiwan Electric (Taipei: 1504 TT). These makers of electrical transmission and generation equipment view great potential in the use of HTS.

Specifically, HTS has the potential to revolutionize the Smart Grid market of generating and transmitting electricity in the United States. Potential benefits could include improving grid reliability by reducing outages, enabling new renewable energy sources through greater network interconnection, and renewing the grid to adapt to growing power demand.

Future applications of HTS technology could also include medical imaging devices as well as next generation power equipment particularly used in electricity generation and distribution. SCON estimates that potential demand over the next 3 years could easily sell out its potential initial production capacity (which could be grown 5x, but still a shortfall to estimated industry demand).

Recent announcements:

During February 2017, Scon was awarded two patents that protect the company’s unique HTS wire manufacturing capabilities. One addresses the ability to incorporate pinning into the superconductor without using additional elements. Since pinning is necessary to improve a superconductor’s performance in a high magnetic field, Scon’s intrinsic pinning method is a key advantage for enabling the high performance wire needed for next-generation motors, generators, MRI and NMR machines.

The second patent protects Scon’s automated machine architecture utilized within the Reactive Co-evaporation (RCE) chamber of its wire manufacturing system. Scon’s invention enables improved cycle time, higher throughput, and lower costs compared to other methods.

During November Scon was selected by the U.S. Department of Energy’s (DOE) Office for its Next Generation Electric Machines (NGEM) program in collaboration with industry partner TECO Westinghouse Motor Company (TWMC). The NGEM program’s objective is to bring about more rapid development of enabling technology for superconductive industrial motors used in manufacturing.

Scon is the prime recipient of the $4.5 million award under the DOE’s broad goal of advancing American manufacturing competitiveness by improving industrial motor efficiency to significantly reduce energy usage and the cost of operation.

Key risk factors and potential stock drivers:

Some key controversies that might govern future stock price performance include:

  1. The company’s future prospects are significantly dependent on the meaningful commercialization and market acceptance of its Conductus wire products. Scon still do not have customers buying significant amounts of its wire products on an ongoing basis. Moreover, previous revenue was significantly concentrated to few customers. Therefore, its ability to successfully gain market share while diversifying its customer base, is critical for its business risk profile.
  1. The company’s business model is plagued by slow transformation and extremely high lead-time. Notwithstanding its recent progress, Scon’s ongoing development efforts can take significant number of years to commercialize, and it must overcome significant technical barriers and deal with other significant risks.
  1. The company’s sub-optimal liquidity continues to impinge its financial flexibility. Therefore, it may need to raise additional capital on a continuous basis. If the company is unable to raise capital in a timely manner, its ability to implement current business plan and ultimately its viability as a company could be adversely affected. Moreover, additional equity would also lead to significant dilution in its existing shares.

Earnings Review:

Scon’s  fourth quarter 2016 net revenues were $9,000, compared to $22,000 in the third quarter of 2016 and $27,000 in the fourth quarter of 2015.  Revenue for all periods was primarily from legacy wireless products.

Profitability:

Net loss for the fourth quarter 2016 was $2.5 million, or a loss of $0.61 per basic and diluted share, compared to a net loss of $2.9 million, or a loss of $0.93 per basic and diluted share, in the third quarter of 2016, and a net loss of $2.4 million, or a loss of $1.23 per basic and diluted share in the fourth quarter of 2015.

Cash Flow & Balance Sheet:

As of December 31, 2016, Scon had $10.5 million in cash and cash equivalents. On Dec.14, 2016, Scon closed a public offering with gross proceeds of $10.3 million.

Stock Performance:

On Wednesday, March 29th, 2017, SCON shares declined by 3.7% to $1.28 on an average volume of 1.81 million shares exchanging hands. Market capitalization is $5.61 million. The current RSI is 60.61

In the past 52 weeks, shares of SCON have traded as low as $1.04 and as high as $4.50.

At $1.28, shares of SCON are trading above their 50-day moving above their average (MA) at $1.19 and below their 200-day MA at $2.02.

The present support and resistance levels for the stock are at $1.2 & $1.52 respectively.

 

About Traders News Source:

Big Opportunities in Small Cap’s

Traders News Source recent profiles and track record, 534% in verifiable potential gains for our members on 3 small cap alerts alone!

January 31st, 2017 (NASDAQ: HIMX) opened at $5.10/share and hit a high of $9.68/share March 24th, 2017 for gains of 89% within 60 days- http://finance.yahoo.com/news/himax-technologies-review-4q-2016-130000319.html

February 6th, 2017- (NASDAQ: SCON) opened at $1.12/share hit a high of $1.80/share within 10 days our member potential gains- 60% – http://finance.yahoo.com/news/superconductor-technologies-potential-revolutionize-smart-130000844.html

March 6th, 2017 (OTC: USRM) opened at .035/share and hit over .17/share within 25 days for gains of 385% for our members- http://finance.yahoo.com/news/traders-news-issues-comprehensive-report-130000743.html

These are numbers that make traders drool. Any trader in any market would fall all over themselves to see numbers like this. So, if you’ve been on the fence, perhaps it’s time to start doing some research and verify our numbers for yourself. We are constantly raising the bar and separate ourselves from the rest of the small-cap newsletters as the best in business.

We know with a large following comes a large responsibility as we have everyone from institutional investors to the beginner following our profiled securities in our newsletters. This is something we take very seriously always seeking small cap growth companies that have both near and long-term potential for our members.

Disclaimer

Traders News Source is a wholly owned subsidiary of Traders News Source LLC, herein referred to as TNS LLC.

Traders News Source has not been compensated for this report by anyone and the opinions if any are that of the author Vikas Agrawal, CFA. Author’s Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I, wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article.

This web site, published by TNS LLC, and is an investment newsletter that is built on the premise of assisting individual investors in learning about investing. Our goal as publishers of financial information is to provide research and analysis of investments to our subscribers. TNS LLC does not give buy or sell recommendations. We do purchase distribution rights from analyst, financial writers and bloggers for a fee that may be licensed to issue price targets and recommendations. Furthermore, we encourage you to speak to a licensed professional prior to making an investment in any type of publicly traded security.

We do sell advertising to other companies including brokerage firms, web sites, publicly traded issuers, investor relations firms, and investment publications, among others. TNS LLC makes no warranty as to the policies of these organizations, and in no way endorses their offers, services, or the content of their advertisements.

When an advertiser is a publicly traded company or a third party acting on behalf of a public company, we fully disclose all compensation in the email advertisement. Such disclosure is included in a disclosure statement in each of the advertisements sent via email.

17B Disclosure

Our reports/releases are a commercial advertisement and are for general information purposes ONLY. We are engaged in the business of marketing and advertising companies for monetary compensation. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. The disclaimer is to be read and fully understood before using our services, joining our site or our email/blog list as well as any social networking platforms we may use.

PLEASE NOTE WELL: TNS LLC and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever.

Release of Liability: Through use of this website viewing or using you agree to hold TNS LLC, its operator’s owners and employees harmless and to completely release them from any and all liability due to any and all loss (monetary or otherwise), damage (monetary or otherwise), or injury (monetary or otherwise) that you may incur. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. TNS LLC encourages readers and investors to supplement the information in these reports with independent research and other professional advice. All information on featured companies is provided by the companies profiled, or is available from public sources and TNS LLC makes no representations, warranties or guarantees as to the accuracy or completeness of the disclosure by the profiled companies. None of the materials or advertisements herein constitute offers or solicitations to purchase or sell securities of the companies profiled herein and any decision to invest in any such company or other financial decisions should not be made based upon the information provide herein. Instead TNS LLC strongly urges you conduct a complete and independent investigation of the respective companies and consideration of all pertinent risks. Readers are advised to review SEC periodic reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D.

TNS LLC is compliant with the Can Spam Act of 2003. TNS LLC does not offer such advice or analysis, and TNS LLC further urges you to consult your own independent tax, business, financial and investment advisors. Investing in micro-cap and growth securities is highly speculative and carries an extremely high degree of risk. It is possible that an investor’s investment may be lost or impaired due to the speculative nature of the companies profiled.

The Private Securities Litigation Reform Act of 1995 provides investors a ‘safe harbor’ in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be “forward looking statements”. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as “projects”, “foresee”, “expects”, “will”, “anticipates”, “estimates”, “believes”, “understands”, or that by statements indicating certain actions & quote; “may”, “could”, or “might” occur.

Understand there is no guarantee past performance will be indicative of future results. In preparing this publication, TNS LLC has relied upon information supplied by its customers, publicly available information and press releases which it believes to be reliable; however, such reliability cannot be guaranteed. Investors should not rely on the information contained in this website. Rather, investors should use the information contained in this website as a starting point for doing additional independent research on the featured companies. The advertisements in this website are believed to be reliable, however, TNS LLC and its owners, affiliates, subsidiaries, officers, directors, representatives and agents disclaim any liability as to the completeness or accuracy of the information contained in any advertisement and for any omissions of materials facts from such advertisement. TNS LLC is not responsible for any claims made by the companies advertised herein, nor is TNS LLC responsible for any other promotional firm, its program or its structure.