Augmented reality smart glass maker Vuzix (NASDAQ:VUZI) stock has been a pandemic benefactor outperforming the benchmark S&P 500 index. It’s said that the COVID-19 pandemic has accelerated the migration and adoption of digital technologies and ecommerce by a decade within a year’s time. Remote, streaming, contactless and convenience are the core themes in the age of COVID. Just like the initial 3COM Palm Pilots and Apple (NASDAQ:AAPL) Newton tablets initially bombed, these precursors paved the way for mobile tablets to become a mainstream household consumer and commercial product now. The same may apply to augmented reality and smart glasses. The pandemic has given a resurgence to the utility of the smart glass technology, referred to as “optical see-through systems”, notably in the medical and commercial segments. The adoption is here to stay and likely grow moving forward in the “new normal”. Prudent investors can wait for opportunistic pullback price levels to gain exposure in this emerging trend.
Q3 FY 2020 Earnings Release
On Nov. 9, 2020, Vuzix (NASDAQ:VUZI) its Q3 2020 results for the quarter ending September 2020. The Company reported an GAAP earnings-per-share (EPS) loss of (-$0.13) in-line with consensus analyst estimates. Revenues rose 156% year-over-year (YoY) to $2.78 million and up 15% sequentially. Follow-on orders continued to accelerate from Q2 primarily driven by existing and new customers in healthcare. Telemedicine, telehealth patient care, training and surgery continue to be an “important new business segment for Vuzix.”, according to CEO Paul Travers. Margins improved to 47% compared to 36% YoY. The Company ended the quarter with $24.9 million in cash and cash equivalents and $31 million in overall working capital.
Conference Call Takeaways
Vuzix CEO, Paul Travers, stated:
“The COVID-19 pandemic has become a catalyst for much broader acceptance of enterprise smart glasses, resulting in shorter evaluation periods and increase customer adoptions.”
He noted that along with healthcare, field service and manufacturing sectors are key growth drivers heading into strong record October sales. The OEM and Engineering Services business is actively engaged with five active programs collectively representing $700,000 in commitments. October has kicked off the fourth quarter with the highest single monthly sales in the Company’s history. Travers noted:
“We’re seeing replenishment orders from resellers, follow-on orders from direct customers and a continued stream of inbound sales from new customers, as our core Smart Glass business continues to accelerate across the globe.”
“We are just getting started with broader smart glasses adoption by enterprise users. Why send the person when you can send a pair of Vuzix Smart glasses? Deploying Vuzix Smart Glasses in enterprise is a safer, cheaper, faster and in many respects a better way of doing business.”
Further noting that ,”the pandemic has forced the point.”
Enterprise Adoption of Vuzix Optical See-Through Systems
The Vuzix M400 accounted for the majority of sales. The M400 captures and streams industry-leading 4K at 30 frames-per-second HD streaming video with image stabilized and autofocusing camera on OLED display especially useful for field service workers. The voice controls built into the base operating system makes it a complete hands-free device. The glasses integrate with video conferencing platforms including Zoom Video (NASDAQ:ZM), Skype, and Cisco WebEx (NASDAQ:CSCO). The M4000 provides a 5000-nit display providing double the field view of the M400. The Blade upgraded version includes built-in stereo audio features. The Company noted th “growing acceleration in adoption driven by business continuity plans and the urgent need to deliver remote expertise without having personnel on site.”
Some of the notable customer wins include Clorox (NYSE:CLX), Pixee Medical and Medtronic (NYSE:MDT). Smart glasses being used from virtual ICU monitoring by doctors doing rounds, to knee replacement operation surgeries training, clinical trials, remote student learning to manufacturing operations support, and auditing. The Company continues to work with Verizon (NYSE:VZ) as a distributor for its EMS solutions bundling of hardware and 5G services focused on bringing “situational awareness technology” to public safety and first responders. Prudent investors that believe in the growth prospect from enterprise adoption of smart glasses can watch for opportunistic pullback levels in shares of Vuzix.
VUZI Opportunistic Pullback Levels
Using the rifle charts on the monthly and weekly time frames provides a broader view of the landscape for VUZI stock. The monthly rifle chart formed a mini pup breakout triggered above the monthly market structure low (MSL)triggered above $1.73. Shares peaked off the $5.27 Fibonacci (fib) level.
The monthly 5-period moving average (MA) support at $4.16 needs to hold long enough for the weekly stochastic to cross up to trigger a monthly stochastic mini pup. The weekly rifle chart has pulled back with a stalled downtrend as the weekly stochastic decides to either crossover back up or form a mini inverse pup drop towards the 20-band.
Since shares are trading over double the pre-COVID highs, prudent investors can wait for opportunistic pullback levels at the $3.89 fib, $3.41 fib, $3.08 fib and the $2.74 fib. Again, it is worth noting that the cheaper the entry, the better value can be derived. While the Company is finally hitting on all cylinders, much of the expectations are priced into the stock and thus deeper pullbacks are the best defense. Upside trajectories range from the $5.27 fib to the $7.80 fib.