Why Investors Should Keep an Eye on Vuzix Corp

Just one year removed from trading at less than $1 per share Vuzix (NASDAQ:VUZI) is now playing in the big leagues with a price above $20. Yet even with this remarkable run, the smart glasses innovator is a relative unknown in the stock market—and this is good news for investors.

After descending from its March 2^nd peak of $26.08, Vuzix stock found plenty of support at the 50-day moving average line. The stock rode a five-day winning streak into Monday afternoon's earnings report. Based on the recent trends and growth outlook, it's easy to see why there may be plenty more green streaks ahead.  

What Does Vuzix Do?

With a presence in the U.S., U.K., and Japan, Vuzix provides smart glasses and augmented reality (AR) technology to both consumers and businesses. The perennial Consumer Electronics Show (CES) award winner's core products include the Vuzix Blade AR smart glasses. These come with built-in speakers and are mostly geared towards retail consumers for various fitness and work activities.

Then there is the line of Vuzix M-Series smart glasses which so far includes the M300XL, the newer M400, and the top-of-the-line M4000. These are made for the enterprise market primarily for manufacturing, warehouse, and field service environments. Last month, the company announced that the M400 and M4000's are compatible with Microsoft Teams video conferencing.

As you may expect these smart glasses go for a bit more than even the most stylish Lens Crafters frames. The Vuzix Blades are priced around $800 while the M4000's are $2,500. Rest assured, a healthy profit margin is built in here.

Through its Vuzix Labs division, it also offers specialized smart glasses solutions for performance-minded industries. The goal is increasing performance and productivity. The first product to be born from this think tank was Smart Swim, a "heads-up display" that gives competitive swimmers real-time performance analytics while training. In other words, a swimmer can see their current lap time right before their eyes while striding through the water and adjust their strategy accordingly.

It's easy to see the potential uses in other sports, but the Vuzix Labs technology has applications in many non-sports markets like manufacturing, logistics, and telemedicine.

 How Were Vuzix's Fourth Quarter Results?

Vuzix reported a record fourth-quarter performance that includes a 117% surge in revenues to $4.2 million. Product sales accounted for 87% of the total with the remainder coming from engineering services. It recorded a net loss per share of $0.09 that was a bit better than the $0.11 loss expected by the Street.

President and CEO Paul Travers noted an uptick in smart glasses demand globally from enterprise customers for remote support purposes. This is a trend that persisted in the back half of the year and included demand from healthcare companies that began using smart glasses to conduct virtual training, perform surgeries, and offer various forms of patient care.

Another interesting development during the year was the launch of two engineering projects with "new major defense customers". This represents a foray into a new industry and shows the breadth of the Vuzix technology.

Management provided a bullish outlook in forecasting "significant" revenue growth for the first quarter and all of 2021 pointing to broad-based demand for smart glasses across its end markets. During the year Vuzix plans to announce the launch of several next generation smart glasses.

Is Vuzix Stock a Buy?

Since Vuzix has been at this for more than 20 years, its experience and vast collection of intellectual property makes it a go to destination for other smart glasses manufacturers. Its products allow people to be in a digital world and simultaneously get a dose of AR. For better or worse, this is expected one of the hot new areas of technology this decade. And it is this reason that more and more app developers are transitioning from making phone apps to lens-based apps.

Given the rising popularity of smart glasses and AR, Vuzix appears to have a long growth runway ahead. Enterprise customers have been increasingly embracing the hands-free technology as a way to increase workplace productivity. In a world of remote workforces, it also provides value by enabling collaborative work experiences through video streaming. For consumers, it is still mostly a novel source of entertainment and fitness tracking, but has potential uses that go beyond these experiences.

All three sell-side firms that cover Vuzix call it a 'buy' Last month, BTIG started coverage of the small-cap stock with a 'buy' rating and $30 price target.

Simply put, the optics are good when it comes to the Vuzix business model and partnerships. Although the lack of profits means it may fail to meet some investors' buy criteria, this is an advantage for those that can appreciate the long-term vision. Smart glasses and AR are coming—and as a leader in the space, Vuzix is a smart way to play a pair of technology's next big growth markets.