Hold - Price 20.61 on Dec. 30
by Morgan Joseph
Ceradyne [didn't ship] any of its new X-SAPI body armor in 4Q08 as a result of a contract protest by a competitor. We are lowering our rating to Hold until the situation is resolved. If the matter had been settled quickly, Ceradyne might have made shipments by year end. Instead, the Army has decided to... seek new bids from suppliers. Those bids are expected to be submitted in mid-January, with orders possible as soon as the end of the month. The competitor is believed to have complained that it did not have an opportunity to update its delivery schedule and pricing data before the awards were made, which gave Ceradyne an approximate 63% of the first X-SAPI production order. Ceradyne management expects to be awarded a similar order in late January, with deliveries starting late in 1Q09. We are decreasing our 2008 estimates slightly to reflect the stop-work order. We estimate $685.9 million in sales, gross profit of $270.8 million, Ebitda [earnings before interest, taxes, depreciation and amortization] of $205.7 million, $165.2 million in operating income and net income of $106.8 million or $3.99 per diluted share. We are significantly lowering our 2009 estimates.... We estimate sales of $599.0 million, gross profit of $204.7 million, Ebitda of $135.5 million, operating income of $97.1 million and net income of $63.9 million, or $2.30 per diluted share.

Crucible maker for silicon (solar cells) industry, low p/tangible book

Ceradyne Inc., a maker of ceramic parts for military and industrial use, said Tuesday its board of directors approved a plan to repurchase up to $100 million in common stock.

The stock trades for 3x cash flow.

Undervalued, coming into it's own,

good stock

very cheap

own - it's loosing money

defense stock

war related

good numbers, low PE, national defense exposure

house of pain