Q: Looked promising for a while, then it corrected. Below IPO pricing. What is driving the negative momentum? Seeing other names gain without fundamentals close to NVEI.
5i Research Answer:
The company had somewhat unfortunate timing in its IPO, in that it saw the rapid runup into 2021, but has since mostly experienced the drawdown and capital outflows from 2022. The name is up 19% year-to-date and remains quite cheap. Its recent quarter was mixed and disappointed some investors, which led to the fall in price. We feel that the fundamentals are attractive, its valuation is quite reasonable at 14.0X forward earnings, and it has a healthy free cash flow yield of 5.0%. We feel that some of the negative sentiment on the name has been a bit overdone, and we think for a long-term hold that this name remains a good buying opportunity at these levels.