ORLANDO, Fla., Jan. 30, 2007 (PRIME NEWSWIRE) -- RedChip Visibility, a division of RedChip Companies, announced that they have initiated research on Zanett, Inc. (Nasdaq:ZANE).
Joe Blankenship, MBA, CFA Level I Candidate, RedChip Research Analyst, wrote in the report:
"With an annual revenue run rate of $44 million through the first nine months of 2006, Zanett has demonstrated its ability to improve gross margins while continuing its organic growth rate at about 15% per year. For the first nine months of FY06, the Company realized gross margins of 31.4%, 220 basis points better than the first nine months of 2005, when gross margins were 29.2%.
"The improvement in gross margins, along with containment of operating expenses, resulted in an operating profit in each of the first three quarters of FY06. High interest expense has turned the operating profit to a loss at the pre-tax line. To assist in the path to profitability, the Company has obtained a new credit facility that is expected to lower the rate of interest paid on its bank lines. The lower interest rate, along with the generation of cash to contain the amount borrowed, should allow the Company to achieve profitability at an annual run rate slightly above $50 million per year.
"We have established a 12-month price target on Zanett stock at $3.60 per share. This price represents a 30x multiple of our estimate of $.012 for EPS in FY08. We have used an aggressive multiple based on the recent contract awarded to the Paragon Division, although we have included none of the possible results in our estimates. We believe this multiple can be attained as the Company continues to demonstrate solid operating profit and begins to generate cash that can be applied toward financing its growth."
To receive a complimentary copy of the RedChip Visibility initial research for ZANE, please visit: http://www.redchip.com/visibility/investor.asp?symbol=ZANE. About RedChip Visibility(tm)
RedChip Research, a division of RedChip Companies Inc., writes fundamental research on small-cap companies. RedChip's success has been documented in Forbes, Barron's and the Wall Street Journal. RedChip Visibility(tm) provides small-cap companies access to both professional and individual small-cap investors by holding conferences throughout the United States, producing online corporate visibility programs, and writing company sponsored research.
RedChip Visibility Research Disclosure
The analysts contributing to this report do not hold any shares of ZANE. Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the analysts' personal views as to the subject securities and issuers. RedChip certifies that no part of the analysts' compensation was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed by the analyst in the report. Additional information on the securities mentioned in this report is available upon request. This report is based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. As such, the report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed herein are subject to change. RedChip Companies Inc. is an affiliate of the Aurelius Consulting Group, Inc. ZANE is a client of the Aurelius Consulting Group, Inc. and of RedChip Visibility, a division of RedChip Companies. ZANE paid RedChip Visibility $28,000 for the RedChip Visibility Research Program, which includes this report.
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