Polypore Loses Ground in Making 'Credible' Case
Shares of the battery technology company are tanking after its fourth-quarter results missed Wall Street's consensus profit view and commentary from management indicated its performance in the first quarter is expected to be worse than the just-reported miss.
Polypore CEO Robert Toth said in a press release, "We began to experience some headwinds in the fourth quarter, which will impact near-term results. We would expect first-quarter results to be below fourth quarter 2011 sequentially."
Yet just a few weeks ago, the company took the unusual step of coming out to vocally support its business in an unscheduled conference call, and even indirectly called bearish analysts suspect in their analysis.
Polypore has become a battleground stock within the alternative energy sector. Its growth business is sales of battery technology for electric vehicles, and it recently became the target of bearish sentiment from Wall Street analysts.
The earnings miss wasn't huge, but shares had rallied back from a 52-week low after the conference call with Polypore management. Revenue of $191 million was below the $196 million expected, and earnings of 58 cents were below the 60-cent consensus. The recent conference call hosted by Polypore management came after a huge decline in shares on a report from South Korean industrial giant LG Chem - a customer of Polypore -that it was getting into Polypore's battery technology market.
Add to this miss the guide to sequentially lower earnings even though the analyst consensus calls for earnings of 66 cents on revenue of $205 million in the first quarter, and the conviction of Polypore management on the call seems in the least, poorly timed.
During that conference call, Polypore's CEO dismissed the recent analyst sell recommendations indirectly by referring investors to "credible" analysts based in Korea who understand its market.
It seems, though, at least for the moment, the analysts who launched at a sell on Polypore, including Gordon Johnson of Axiom Capital and Theodore O'Neill of Wunderlich Capital, remain as "credible" in pinning the Polypore outlook as the company's management.
Axiom's Johnson, who rode a multi-year short on First Solar (FSLR) to success, chose Polypore as his next target after the First Solar short ran its course to end 2011. He cited a coming glut of lithium ion battery technology for the electric vehicle market as a material threat to Polypore margins and market share.
Polypore shares were down by 13% in after-hours trading and at under $38 in after-hours trading, were headed in the direction of a 52-week low of $36.60 that shares hit on the day the LG Chem announcement was made.
Polypore's CEO continues to focus on long-term growth, saying in a release, "We anticipate full year growth and we remain focused on building our business for the long term."