Pros and Cons For Buying Netlist, Inc. (NLST)

Here’s how investors should make decisions about buying, holding or selling Netlist, Inc. (NASDAQ:NLST) stock. On Friday, shares of Netlist, Inc. (NASDAQ:NLST) closed higher after an active session. The shares accumulated 0.21 points or 49.12 percent at $0.65 with a heavy trade volume of 25.745 million shares. After opening the session at $0.437, the shares went as high as $0.65 and as low as $0.41, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $74.75 million and now has 115 million shares outstanding. Netlist, Inc. (NLST) stock has gained 434.98 percent of market value in 21 trading days.

NLST stock has a trailing 3-year beta of -1.57, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was $-0.18 a share in the trailing twelve months. The stock’s value has surged 111.38 percent year to date (YTD) against a decline of -8.45 percent in 12 month’s time. The company’s shares still trade -40.91 percent away from its 1-year high of $1.10 and 550 percent up from 52-week low of $0.10. The average consensus rating on the company is 2, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a buy.

Netlist, Inc. (NLST) will probably climb -100 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $1-month high price target. This represents a whopping 53.85 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $0.88, which represents a return potential of 35.38 percent when compared to the closing price of the stock of $0.65 on Friday, September 21. The lowest price target for the stock is $0.75 — slightly more than 15.38 percent from NLST’s current share price.

History has shown that shares in Netlist, Inc. have gone down on 18 different earnings reaction days and are predicted to add 0.09 percent when the company reports upcoming earnings. Investors will get their next glimpse of NLST’s Q3 earnings on November 13. Analysts are forecasting revenue to suffer decline of -0.7 percent to $8.95M in the fiscal third quarter, while earnings are seen soaring by nearly -40 percent to $-0.03 per share. It earned $-0.04 per share, worse than the $-0.02, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $8.43M, worse than the $11.15M analysts expected. Earnings are estimated to increase by 1.9 percent this year, 26.7 percent next year and continue to increase by 15 percent annually for the next 5 years.

Let’s take a look at some insider activity at Netlist, Inc. (NASDAQ:NLST) and see the pattern. The earliest insider trade took place on 06/15/2017. Hong Chun K parted with a total of 24.73 thousand shares of company at average share price of $1.09. The total for the sales was set at $26.96 thousand. After this transaction, the President, CEO and Chairman, 10% Owner account balance stood at 4.84 million shares. The stock lost -40.37 percent since that insider sale. On 06/13/2017, Hong Chun K, President, CEO and Chairman, 10% Owner, sold 74.21 thousand shares at a price per share of $1.12. This removed 83.11 thousand shares from the insider’s fortune and the stock saw a -41.96 percent retreat in value since the news became public. This transaction left 4.86 million shares in the President, CEO and Chairman, 10% Owner account.

On 06/08/2017, President, CEO and Chairman, 10% Owner Hong Chun K performed a sale transaction worth $118.48 thousand. This sale at $1.17 each has eliminated 101.26 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded -44.44 percent decrease since the transaction was reported. The insider now is left with 4.94 million shares remaining in the account. Hong Chun K, who performs the President, CEO and Chairman, 10% Owner job, sold 24.28 thousand shares for $29.62 thousand. The disposal occurred on 06/06/2017 was priced at $1.22 per share. The share price plunged -46.72 percent since the reporting date. Hong Chun K now left with a stake of 4.93 million NLST stock worth $3.2 million after the insider selling.

The stock is currently hovering around the first support level of $0.49. Below this, the next support is placed in the zone of $0.33. Till the time, the NLST stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 67.61 on daily chart, which may remain a cause for concern. If the price breaks below $0.33 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $0.73 mark may result into a pull-back move towards $0.81 level.

Further, it is sporting a 2.15 on the Price-to-Sales ratio. Compare this with the industry average P/S of 33.65. 5.7 percent is the gross profit margin for Netlist, Inc. and operating margin sits at -39.5 percent. Along with this, the net profit margin is -41.2 percent.