For this week's best call, we at Singular Research took a look at Measurement Specialties, Inc. (NASDAQ:MEAS), a global designer and manufacturer of sensors and sensor-based systems. The company serves various key markets such as automobiles, consumer products, aerospace and defense, heavy equipment and medical. Measurement Specialties announces their Q3 earnings next week, but provided an updated guidance earlier this month with expected sales of about $76 million for the quarter. While the sales projection is below our prior forecast, the book-to-bill ratio for the quarter recovered to a very strong 1.07 from the 0.97 ratio in Q2:12.
Frank DiLorenzo, Singular's analyst covering the company, lowered our earnings per share expectations to $0.36 from $0.50, and full year to $1.72 from $1.97. However, while Q2 of 2012 was disappointing and Q3 will show some relative weakness, the strong uptick in the book-to-bill ratio for the third quarter bodes well for the fourth quarter. Therefore, we continue to expect solid growth for 2013.
Singular has a 12-month target price of $45 for Measurement Specialties, which represents an upside potential of about 38 percent. Our discounted cash flow model assumptions include a weighed average cost of capital of 8.6 percent, annualized operating income growth of 10 percent through full-year 2014, return on capital of 10 percent and terminal growth of 3 percent.
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