Sweden-based optical sensing solutions provider Neonode (NEON) saw its shares jump 107.9% over the past month due to investor interest surrounding its recent deal with Korean contactless solution provider, and growing demand for its TSM solutions. However, due to bearish analyst sentiment and a negative profit margin, we think the stock looks overvalued at its current price level. Is the stock still a buy? Read more to find out.Based in Stockholm, Sweden, Neonode Inc. (NEON) is the go-to company for advanced optical sensing solutions, including touch, contactless touch, gesture control, and remote sensing. Substantial growth in its TSM sales in the last reported quarter due to the rising demand for contactless touch applications for elevators and kiosk applications from Asian customers has helped the stock gain 55.4% over the past three months.
However, NEON’s stock is currently trading 21.2% below its 52-week high of $12.42. Although Korean contactless solution provider Doostek’s recent selection of NEON’s Touch Sensor Modules for contactless kiosk trials at an airport and other strategic partnerships have helped its stock gain 19.4% over the past five days and 107.9% over the past month, the company’s cash burn rate and negative profit margin could make investors wary. In addition, the pandemic’s negative impact on its customers’ businesses and their sales volumes could, in turn, hamper NEON’s business growth.
Here’s what could influence NEON’s performance in the upcoming months: