New York, NY - April 4, 2014 (www.investorideas.com newswire) Taglich Brothers released an updated research report on CTI Industries Corp. (CTIB) and raised the rating to Speculative Buy with a (12-month) price target of $6.40 per share based on estimated 2015 revenue and a projected price-to-sales multiple. The report noted the following key investment considerations
A ramp in branded vacuum sealing machines and pouch products should, with support from economic gains, drive revenue and profit growth into 2015. But heavy high-interest borrowing used to finance the investment in the production and launch of vacuum sealing machines and pouch products will continue through 2015.
Wider distribution of vacuum sealing machines and open-top/roll pouch products, which now account for 18% of CTI’s revenue, has driven strong growth for a high-margin product line, growing sales of which could drive margin improvement.
For 2014 the International Monetary Fund projects strong GDP gains in US, Mexico and Europe after a weak 2013. While US GDP gains are constrained by consumer sentiment, US retail sales have maintained a largely upward trend during the past two years.
We increased our 2014 EPS estimate to $0.14 per share from $0.19 mainly to reflect higher interest expense. We project 2015 EPS of $0.18, a gain driven by revenue growth and leverage of operating expenses.
In 4Q13 (results released Mar. 25, 2014) CTI earned a profit of $66,000, or $0.02 per share, on revenue of $15.2 million. We projected 4Q EPS of $0.05 per share on revenue of $15 million. In the year-earlier quarter, CTI lost ($0.08) per share on revenue of $12.1 million.
CTI Industries Corporation, through its facilities in Illinois, Mexico, and the United Kingdom, is primarily engaged in the development, manufacture, sale, and distribution of: 1) Novelty products, principally balloons (including mylar balloons and latex balloons), punch balls and other inflatable toy items; and 2) Specialty and printed films primarily for food packaging, specialized consumer uses, and various commercial applications.
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