Intevac, Inc: Micro-Cap Tech Could Be Set to Break Higher

Intevac Inc (NASDAQIVAC) Micro-Cap Tech Poised to Break Higher
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Intevac, Inc. Doesn’t Get the Star Treatment, but Perhaps it Should

Way back in 2010, Intevac, Inc. (NASDAQ:IVAC) was trading at $16.85 and the stage appeared to be set for some big gains. Fast forward nearly a decade and IVAC stock has seen its value drop by 70%.

The stock is underperforming the S&P 500, Nasdaq, and Russell 2000—down 1.3% this year and 2.6% over the past year.

But while the market action for Intevac stock is underwhelming, there is still some hope for a rebound for this micro-cap technology stock.

The price chart shows IVAC in a sideways channel and looking to break higher at $5.40 on rising relative strength and moving average convergence/divergence (MACD).

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Chart courtesy of StockCharts.com

Intevac, Inc. has been around since 1991 but has yet to produce the steady financial growth desired by Wall Street.

The company manufactures high-productivity thin film, vacuum processing technologies, and sensor design used by technology companies to develop better products.

Perhaps it’s because Intevac makes the film for hard drives in the age of cloud storage that investors have been turned off. That may be the case, but the company also supplies solutions to the solar energy and defense sectors.

For example, the night vision products used by the military include the company’s digital imaging solutions.

My Bull Case for IVAC Stock

Intevac, Inc. reported sequential revenue growth from 2014 to 2017, prior to a decline in 2018.

But things are looking better. Intevac is expected to grow its revenues by 12.1% to $106.6 million this year, followed by 17.1% to $124.8 million in 2020. (Source: “Intevac, Inc. (IVAC),” Yahoo! Finance, last accessed September 13, 2019.)

Fiscal Year Revenue (Millions) Growth
2014 $65.6
2015 $75.2 14.7%
2016 $80.1 6.6%
2017 $112.9 40.8%
2018 $95.1 -15.7%

(Source: “Intevac Inc.MarketWatch, last accessed September 13, 2019.)

Intevac delivered positive earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2017 and 2018. EBITDA growth outpaced revenue growth from 2014 to 2017 before disappointing in 2018.

Fiscal Year EBITDA (Millions) Growth
2014 -$14.6
2015 -$4.2 71%
2016 -$2.8 33%
2017 $8.5 401%
2018 $0.3 -97%

(Source: Ibid.)

Intevac produced positive generally accepted accounting principles (GAAP) earnings per share (EPS) in 2017 and 2018.

Fiscal Year GAAP Diluted EPS Growth
2014 -$1.16
2015 -$0.41 65%
2016 -$0.36 12%
2017 $0.18 150%
2018 $0.16 -13%

(Source: Ibid.)

On an adjusted basis, LVAC lost $0.19 per diluted share in fiscal 2019, but things are expected to improve as Intevac is estimated to make as much as $0.30 per diluted share in fiscal 2020. (Source: Yahoo! Finance, op. cit.)

Analyst Take

Insiders have been aggressively picking up shares of Intevac stock over the last year. During the past six months, investors bought 231,500 shares and sold 7,566. (Source: Ibid.)

For a micro-cap, Intevac, Inc. has been generating sound fundamentals. If the company can deliver consistency, its shares will likely rally.

Trading at 15.2 times its high estimate, IVAC stock looks attractive as a growth stock, especially given that it trades at only 1.3 times its book value.