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Soapstone Networks Inc. (SOAP) is now a developer of emerging, software-based service and control solutions for service providers' next-generation networks. The company is primarily focused on developing and marketing its Soapstone PNC (Provider Network Controller) framework.
Without meaningful current revenues and limited visibility into future revenue, our price target on SOAP is based on the company's cash balance. We estimate that Soapstone will have approximately $6.33 per share in cash in six months, the horizon of our target price. Although the stock is likely to trade below its cash value until Soapstone shows traction from its PNC business, we believe its strong cash balance will provide some support given that it will not burn through all its cash for years.
If new initiatives are unsuccessful, it is always possible that the company liquidates or chooses another strategic option to return the cash to its shareholders. On the other hand, the shares are unlikely to appreciate without any meaningful customer news. We therefore maintain a Hold rating on SOAP shares with our six-month price target of $3.00.
Anita Mohata contributed to the report.
Read the full analyst report on SOAP
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