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Investors Increasingly Bullish After Vuzix Corporation (VUZI) Announces Development Agreement With Toshiba Corp NPV (TOSBF)

By Pablo Erbar

Last month Vuzix Corporation (NASDAQ:VUZI) disclosed plans to build a pair of custom smart glasses for Toshiba Client Solutions Co. Ltd. – a wholly owned subsidiary of TOSHIBA CORP NPV (OTCMKTS:TOSBF) – as part of a development agreement with the Tokyo-based firm. The deal will see Vuzix generate more than $1 million in revenue for the development of the modified M300s, while purchase orders are set to start in the fourth quarter of 2017. Once Toshiba begins with the resale in early-2018, Vuzix expects to be selling thousands of smart glasses through this newly created distribution channel.

The partnership between these two companies comes just one year after TOSHIBA CORP NPV (OTCMKTS:TOSBF) decided to cancel the release of their Wearvue smart glasses. Hence, the partnership not only represents a great opportunity for Vuzix Corporation (NASDAQ:VUZI) to continue to grow, but also validates the company’s position as a leader in the smart glasses industry. In fact, management believes other major technology companies will follow in the footsteps of Toshiba in the near future. Due to this optimistic outlook and the fact that the demand for smart glasses exceeds the current supply, Vuzix has already begun working aggressively to ramp up production.

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Just a few months before entering the partnership with Toshiba, the leading producer of smart glasses was still dealing with regulation hurdles in Europe and the U.S. The delay in obtaining regulatory approval for the M300s generated a supply constraint and lowered revenue estimates for 2017. Now that Vuzix Corporation (NASDAQ:VUZI) has overcome these obstacles and is building a new distribution channel for its product, the company has reconsidered its growth and sales estimates for the coming year. In fact, analysts are urging investors to buy shares ahead of the projected increase in revenue throughout 2017.

The recent development agreement reached with TOSHIBA CORP NPV (OTCMKTS:TOSBF) certainly marks an inflection point for Vuzix and investors interested in the company were quick to realize this. Just two weeks after announcing the deal, Vuzix saw its stock price rise by approximately 35%. Share prices could now recover from the downwards trend experienced throughout the past six months.

The stock is currently trading at around $7.35 per share and is expected to reach a price target of $11 according to equity research analysts at Maxim Group. Considering the latest developments, this bullish stance towards Vuzix seems appropriate. The cutting edge technology of the M300 smart glasses, along with a growing market, is already generating new growth opportunities for the company. In addition to attracting the interest of distributors, software providers focused on building apps and content for smart glasses are also looking to do business with Vuzix Corporation (NASDAQ:VUZI).

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Disclosure: Pablo Erbar holds no interest in any of the securities of entities mentioned above.