We recently upgraded our recommendation on Eastman Kodak (EK) to Neutral from Underperform.
We believe that the numerous promotional programs and product launches will certainly push forward Kodak’s revenue growth despite the current competitive environment of the entire industry.
Moreover, the company’s investment strategies in digital growth businesses including consumer inkjet, commercial inkjet, enterprise software, digital plates as well as packaging are expected to raise market share trend and induce future growth.
However, the company faces the risk of third party manufacturers and external suppliers owing to its outsourcing operations, strategic alliances, and divestitures for a significant portion of its worldwide manufacturing and back-office business. Such risk involves rising cost of manufacturing as well as diminishing reliability of products.
The company’s focus on achieving positive cash generation as well as its planned maintenance of liquidity, bears possibility of improved performance; thereby easing the pressure of overcapacity in the film industry and digital transition.
Over the past several years, the company has been facing incremental raw material prices, following price volatility in case of silver. However, the introduction of new software products like document viewer and scanner softwares, providing a strategic product mix for the company, is anticipated to offset the rising production cost.
Based in New York, Kodak provides imaging technology products and services to the photographic and graphic communications markets across the globe. The company directly competes with its peers such as Canon Inc. (CAJ), Sony Corporation (SNE) and FUJIFILM Holdings Corporation (FUJIY.PK).
We currently maintain a long-term Neutral recommendation on the stock. Kodak has a Zacks #3 Rank, which translates into a short-term Hold rating (1-3 months).
CANON INC ADR (CAJ): Free Stock Analysis Report
EASTMAN KODAK (EK): Free Stock Analysis Report
Be the first to comment