Avigilon Corp. (TSX:AVO) shareholders have seen their stock take a wild slide in recent days, and analysts say the recent departure of several senior executives have a lot to do with it.
Despite first-quarter earnings, released May 7, that included a 74% increase in revenue over Q1 2013, Avigilon’s share value dropped 28% over a three-day trading period.
The high-definition surveillance camera maker’s stock dropped from $26.13 per share at close of markets May 7 to a low of $18.68 on May 12, before it started bouncing back on May 13.
It’s what happened the day before the Q1 financials were released that analysts say helped trigger the stock slide. On May 6, the company announced the departure of CFO Bradley Bardua.
“In connection with a personal health issue, Mr. Bradley Bardua is no longer with the company and the company wishes him well,” the company said in a press release.
That news followed the departure of three other senior executives in the past six months, and it came at a time when there has been a general sell-off in technoogy stocks.
“Over the last couple of weeks, we’ve had a sell-off across the broader tech sector in some of the higher growth names, so I do think that was a factor leading to the stock sell-off before the CFO departure was announced,” said Thanos Moschopoulos, an analyst for BMO Capital Markets.
“Although I think that the sell-off we’ve seen subsequent to that was related to the CFO departure.
“It’s not just the fact the CFO left. I think it’s the executive turnover we’ve seen, which arguably increases the potential execution risk to the company.”
Avigilon CEO Alexander Fernandes was travelling and could not be reached for comment, but said in an email to Business in Vancouver that he did not attribute the company’s share price drop to any crisis in upper management.
“ I believe that it is quite normal for any company of our size to experience turnover,” he wrote.
“I know that it is quite normal for people to speculate when the market fluctuates,” he added. “Our financials are impeccable, and our operations strong. It is the nature of stock markets to fluctuate for a variety of reasons, but we remain steadfast and unwavering in the execution of our business strategy.”
Despite the concerns over senior executive vacancies, Moschopoulos said Avigilon’s Q1 results show the company is in strong financial shape. He has an outperform rating on Avigilon’s stock of $30 per share, although that is down from his previous target of $35 per share.
“Based on the results we’ve seen so far, they’ve obviously done a very good job of building the business, and in my own view that’s likely to continue,” Moschopoulos said.
One of the darlings of Vancouver’s tech sector, Avigilon was the only technology company in Canada to go public in 2011. It raised $25 million with its IPO on the Toronto Stock Exchange and now has a market cap approaching $1 billion.
Avigilon’s shares were up 8% to $20.27 per share at close of markets May 14.
