Thomas Wiesel keeps its outperform rating on Neoware Systems (NWRE ).
Analyst Kevin Hunt says the 12 cents fourth-quarter earnings per share beat his 11 cents estimate on a record 47.3% gross margin, which beat his 44.1% estimate. He says Neoware remains his top pick given the long-term growth opportunity for thin clients, the ability to gain share (especially via the IBM relationship), exceptional margins, and cash flow generation.
Hunt says days sales outstanding remained steady at 63 days in the fourth quarter, and inventory fell to to 8 days from 14 days in the third quarter. He notes Neoware had $29.2 million in cash at the end of the fourth quarter, up $12 million year-over-year, yielding a 70% increase in free cash.
Hunt sees 58 cents fiscal 2004 (June) earnings per share, and 80 cents earnings per share in fiscal 2005.