Zoltek earned $2.6 million in the fiscal Q1 (ended Dec. 31) compared
with a loss of $5.7 million in the same quarter a year earlier. Sales
rose $9.8 million, or 32%, to $40.1 million. Analysts at Thomson
Financial had predicted sales of $46 million.
"The company missed its own sales prediction and Wall Street profit
expectations because of customer plant shutdowns in Europe during the
holiday season and customer inventory buildups. ZOLT's shares are now
trading pennies above their 52-week low.
"The company still believes that it will meet its sales goals for 2008
-- and there are plenty of reasons to believe them. As one of the only
suppliers of carbon fiber to the wind market, Zoltek is in good
position to ride the growth in this alternative energy sector.
"Zoltek is also set to benefit from major changes occurring in the
auto industry. The new energy bill signed by President Bush mandates
tougher fuel-economy standards. One consequence of this will be that
auto makers will be compelled to produce lighter vehicles.
"Industry analysts expect that the new rules will give producers of
lightweight materials (i.e., carbon fiber) reason for optimism. During
the next few years, automakers will be using an increasing tonnage of
new materials to help meet the new mileage standards.
"While Zoltek is ramping up production to meet an anticipated surge in
demand, the key to its longer-term success in the auto industry will
be linked to lowering prices, which can only happen once it enters
mass production.
"Despite the price setback, it is the multiple high-growth markets for
ZOLT's carbon fiber that will ultimately be the driver that pushes
shares to record levels. Take advantage of the sharp decline in the
price of ZOLT and look to patiently build positions."
