Digital cameras are hot. With Christmas coming on, some analysts see Concord Camera (LENS), the less-known rival of Canon (CAJ), Nikon, and Eastman Kodak (EK), going gangbusters. That's because Concord's digitals are at least 50% cheaper than competitors', even though Concord is upping its average price for new high-resolution models from $70 to $100. Concord's ability to produce at far lower costs (mostly in China) lets it undercut rivals while maintaining profit margins, says Michael Kim of Roth Capital Partners, which owns shares and has done banking for the company. Concord is big in disposables, most of which are supplied to camera biggies such as Kodak and Fuji. Concord will now focus on marketing its new digitals, says Kim. In the first quarter of fiscal 2004, ended Sept. 27, digital sales rose to $9.6 million, up from $7.2 million a year ago -- when prices averaged $71. Total first quarter sales were $57.4 million. Gary Steiner of Awad & Associates, owner of a 6.8% stake, expects the stock, now at 10.57, to hit 15 in a year. It fell from 14 to 10 on Nov. 6, when Concord said net income dropped by $3 million, or 10 cents a share, in the fiscal first quarter because of a change in inventory accounting. Kim believes the market overreacted, and he says the change won't affect future margins. He sees fiscal 2004 earnings of 43 cents a share, on sales of $248.6 million, vs. 2003's 18 cents on $189.8 million. He rates Concord a buy.
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
Corrections and Clarifications
"A Christmas bonanza for Concord?" (Inside Wall Street, Dec. 1) erred in stating that Roth Capital Partners owns shares in and has done banking for Concord Camera. It does not own shares nor did it do banking. A confusing disclosure note in an analyst's report led to the error.
By Gene G. Marcial