Optimism has always typified Indigo. The company's employees, managers, and first and foremost its founder and president Benny Landa have always believed that the company was on the verge of breaking through and translating its technological superiority in developing digital printers into cash. Until now this has not occurred.
At the end of last week Indigo announced it was expanding its manufacturing volume to meet the increasing demand for its printers, following the company's successful display at the DRUPA 2000 exhibition. "We couldn't be happier about the results of DRUPA 2000," Landa said. Before the exhibition, Landa had predicted, "DRUPA 2000 will be the digital printing Olympics. The digital printing industry will come of age, and will experience dramatic accelerated growth after Drupa. At Drupa the competition will be fierce, and winners, and losers will emerge. "We at Indigo plan to be among the winners"
Just as we said, eternal optimism. This time, however, it appears that Landa has good reason for it. In the opinion of Oppenheimer investment house analysts, the company is on the verge of a business breakthrough. Oppenheimer is the only investment house reviewing Indigo.
For the first time in two years, Oppenheimer amended its "Hold" recommendation to "Buy", and even set a target price for the share of $7.2, 25% over the market value on the day the recommendation was published last week. At the end of last week, however, Indigo exceeded the target price by jumping 35% to $7.8.
Oppenheimer notes that Indigo's pavilion at DRUPA 2000 drew a large audience and was one of the busiest and most interesting in the exhibition. Indigo presented a wide variety of products, suitable for almost anyone wishing to transfer to the digital world or improve his status in the field. Among its inexpensive products facilitating initial penetration into digital printing, Indigo presented the e-Print Pro, a basic color printer priced at $150,000, and the Ebony, a basic black and white printer in the final development stages.
Indigo also presented more expensive high quality products, such as the TurboStream, a color printer that prints 1,000 pages per hour, priced at $320,000, and the UltraStream, which prints at the rate of 2,000 pages per hour at a higher printing quality, which costs $550,000.
Indigo received about 150 orders during the exhibition, mostly for its more expensive, profitable products. The company also reported it had received 6,000 calls from printing houses asking for a private demonstration or a meeting with sales personnel.
The analysts at Oppenheimer assess that the long awaited breakthrough in the field of digital printing has begun. In their opinion, after five years of activity, things are moving in the direction of digital printing. Oppenheimer emphasizes that the discovery of the market's potential by new players, such as Heidelberg and Kodak, is likely to increase awareness of its products, while enlarging its volume.
Oppenheimer adds that Xerox and NexPress, the joint venture of Heidelberg and Kodak, are still far from bringing a mature product to the market. At the same time, the very fact that they are moving in the direction of colored digital printing shows the attractiveness they attribute to this market. Xeikon, Indigo's largest competitor, has developed a new product fed with individual sheets of paper, which is comparable to Indigo's e-Print Pro in its functionality. Oppenheimer estimates that this product will be ready for marketing by the end of the year, and its price, $150,000, will be competitive with Indigo's. Oppenheimer regards Xeikon as less threatening to Indigo than previously. Its products are inferior from both a technological and marketing standpoint. Xeikon currently enjoys less support from Agfa, whose activity in this field was acquired, and from Xerox, which is not pushing the new low end printer presented at DRUPA 2000.
Indigo's other competitor, NexPress, is expected to launch its competing printer in mid 2001 at the earliest.
Oppenheimer's analysts returned from the DRUPA 2000 exhibition greatly encouraged at the direction taken by the printing industry and Indigo's chances as the market leader. They expect Indigo's revenues to grow in 2000 by 32% to $135 million. The analysts predict a steeper growth of 40% in the coming years, accompanied by larger rates of profit. They expect the company to reach breakeven point in the last quarter of the year and to present a $3 million profit, $0.04 per share, already in 2001. The big turnaround will come in 2002, in which the company is expected to earn $39 million, or $0.48 per share.
Published by Israel's Business Arena on June 13, 2000