The audio-visual technology company has been a significant driver of strong performance in the Emerging Companies Portfolio, particularly over 2023, where the stock is up over 70%. FY23 results were well ahead of market expectations which saw the stock re-rate and surge higher in August. More recently, the company raised $70m through a placement and Share Purchase Plan (SPP), which has further strengthened its balance sheet and leaves it well-placed to look at M&A opportunities to add to its already impressive earnings growth trajectory.
Audinate reports in US Dollars as it bills customers and pays the Cost of Goods (COGs) with the greenback, as a result, currency plays an important role in the company’s value. A strong USD would be a tailwind for AD8’s share price, given the ‘free kick’ it receives when converting earnings back to AUD. As a result, we are turning more cautious about AD8, given our bearish view on the USD.
- While we see long-term value in the company, it is expensive, and a swing in the currency may prove to be the reason for a pullback in the stock.
MM is turning neutral AD8
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