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DJ Audinate Has Balance Sheet to Ride Out Chip Shortages -- Market Talk

AD8$8.825

-$0.125 (-1.4%)$8.82$8.83

19 Oct 2021 15:44:41

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0444 GMT - Audio-visual equipment manufacturer Audinate has the competitive position and balance sheet to ride out problems caused by chip shortages, Morgan Stanley says. The U.S. bank acknowledges that chip headwinds mean a bear scenario is playing out, but it says this will be transitory and remains overweight on the stock. Audinate has enough inventory for 2Q and will experience its sales trough in 3Q, Morgan Stanley says. Accelerating product development and price rises will help offset the overall impact, it says. Morgan Stanley cuts its FY 2022 revenue forecast by 14% but keeps a A$12.00 target price on the stock, which is down 1.0% at A$8.86. (stuart.condie@wsj.com; @StuartLCondie)

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Although AD8 is the industry leader its still a relatively small company with a long growth runway ahead.

The company shipped 59% more units this half versus the prior year. Also software sales are up by 21%.

Dante is establishing itself as the industry standard for audio networking with more Original Equipment Manufacturers using Dante.

Management estimates their current digital audio networking penetration at around 8% leaving Audinate a long runway for growth.