Xcerra’s Stock Buoyed by Busted Deal

The stock chart for XCRA, Xcerra’s common shares traded on the Nasdaq Global Select Market, looks like a hockey stick since late February, when the company called off its acquisition by Chinese investors in the face of opposition by the federal Committee on Foreign Investment in the United States. That busted deal may prove to be a blessing in disguise for Xcerra, which posts impressive financial results on a regular basis.

The stock was in the doldrums, trading for less than $10 a share for weeks before the proposed acquisition came apart. (The purchase agreement called for $10.25 per share in cash.) Interest in XCRA started to take off on February 23, with more than 7 million shares traded that day. The stock’s daily volume has averaged more than 1 million shares.

In the past six weeks, XCRA has raced past $10 and peaked at $12.08 on March 21, before settling at around $11.50 or higher since then. That’s not exactly promising a killing on the market, although some market watchers predict the stock will go up to $15 a share in the near future.

The company announced in late March that it now has a preferred supplier agreement with Elmos Semiconductor, which makes microchips and sensors for automotive applications. It is a multiple-year deal to exclusively provide semiconductor test equipment to the German chipmaker.

XCRA closed last Friday at $11.79.

Investors have been generally enthusiastic about test equipment stocks in recent weeks, favoring Keysight Technologies, National Instruments, and Teradyne in particular.

Zacks Equity Research has a “Strong Buy” recommendation on KEYS, the Keysight stock, which has gone from $42.15 at the beginning of 2018 to as high as $55.21, and lately trading in the low 50s.

National Instruments has been on a similar tear, with NATI rising from $42.30 at the outset of this year to a high of $53.51 and hovering around $48 late last week.

Teradyne has been whipsawed by the bulls and the bears in the past three months. TER started 2018 at $44.18, fell to $39.67 in early February, peaked at just under $50 a share on March 12, and declined to less than $45 last week.

Playing the stock market – it’s not for the faint-hearted!