Intermolecular Inc (NASDAQ:IMI) has steadily advanced from $1.83 to $2.89 since the beginning of February and has locked in gains of over 40%. Federman Irwin, a director of the company and an insider, has been accumulating almost 100,000 shares with an average purchase price around $2.00 to $2.12. Remember insiders only buy for one reason and that is the belief that the company is going to be much higher in the future than it is today; especially when the insider has put $200,000 on the line.
IMI financial performance has been poor to say the least since 2012. Revenue has declined from $66 million in 2012 to $46 million in 2015 full year. However, there are some bright spots that reflect a potential turnaround for IMI. The first is that gross profit has climbed in 2015 to $26.39 million from $23.04 million in 2014. In addition, IMI has been able to reduce interest expense drastically since 2012 from $1 million to $0.267 million. Unfortunately, SG&A expense has increase despite the fall in revenues since 2012 and from 2014. IMI has been investing significantly in RnD which could pay off in future products, technology licensing, or some other monetization method.
Again, pointing to a turnaround is looking at its quarterly results. Analyzing their most current earnings release for Q4 2015 compared to the same period in 2014, revenue has climbed from $11 million to $13.46 million which represents an increase of 22%. Revenue has increased every quarter since Q1 2015. Operating loss has seen a reduction of $3.98 million from ($5.92 million) in Q4’14 to ($1.90 million) in Q4’15.
Usually a stock moves in advance of news and information, and looking at IMI’s chart it is poised for big gains in the future. The stock has surged above its 10 weekly moving averages and 30 weekly moving averages which is a bullish long-term indicator. If both moving averages slope upward, it would confirm the uptrend momentum. It would not be surprising to see the stock advance between $4.00 or $6.00 representing a gain of 50% to 123% from current levels.
Intermolecular is a leading source for advanced materials discovery and understanding. IMI work closely with their customers using our High Productivity Combinatorial™(HPC) platform to discover, develop and characterize engineered materials for next generation high-technology products.
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IMI is currently trading at a $126 million market valuation. IMI is starting signs of a turnaround in its financial performance and its stock chart. The stock has broken out of its long-term base and poised for significant gains. If revenues, gross profit, and operating income can steadily advance over the coming quarters, the stock price should be at much higher levels than it is today.
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Disclosure: we hold no position in IMI either long or short at the publication of this article and we have not been compensated for this article.