Ultralife Corporation

Ultralife Corporation (NASDAQ: ULBI) offers products and services ranging from power solutions to communications and electronics systems. Its designs and manufactures power and communications systems, including rechargeable and non-rechargeable batteries, charging systems, communications and electronics systems and accessories, and custom engineered systems related to those product lines. Its segments include Battery & Energy Products and Communications Systems.

Recent Financial and Business Updates:

• Second Quarter 2023 Revenue: USD 42.7 million, up 32.9% from Q2 2022 (USD 10.6 million increase).
• Government/defense sales increased by 111.5%, while commercial sales grew by 9.2% over the previous year.
• Battery & Energy Products sales increased by 12.3% to USD 33.9 million, with notable growth in government/defense, medical battery, and oil & gas markets.
• Communications Systems sales increased significantly to USD 8.8 million, primarily due to contracts with defense contractors.
• Total backlog for Q2 2023 was USD 110.9 million, a 40.1% increase from the previous year, with USD 76.4 million set to ship in the remaining six months of 2023.
• Gross profit was USD 10.6 million (24.8% of revenue) compared to USD 7.6 million (23.8% of revenue) in Q2 2022.
• Operating expenses remained flat at USD 6.9 million (16.2% of revenue) compared to the previous year's Q2.
• Operating income increased by USD 2.9 million to USD 3.7 million compared to USD 0.8 million in Q2 2022.
• Other income included a USD 1.5 million Employee Retention Credit (ERC) under the CARES Act and American Rescue Plan.
• Net income was USD 3.3 million (USD 0.21 per diluted share) on a GAAP basis, compared to USD 0.5 million (USD 0.03 per diluted share) in Q2 2022.
• Adjusted EPS was USD 0.29 (diluted) for Q2 2023, compared to USD 0.03 for the same period in 2022, excluding a USD 1.3 million provision for deferred taxes.
• Adjusted EBITDA, including non-cash, stock-based compensation expense, was USD 6.3 million (14.7% of sales) for Q2 2023, compared to USD 2.2 million (6.8% of sales) in the previous year's Q2.

Technical Observation (on the daily chart)

Currently, the stock is near an important resistance zone of USD 10.00-USD 11.00, therefore some short-term correction can be expected before the continuation of the uptrend. The RSI (14 period) momentum indicator is at a value of 67.01, with expectations of some consolidation or some short-term correction. Moreover, the price is currently positioned above both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term support levels.

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As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Watch’ rating has been given to Ultralife Corporation (NASDAQ: ULBI) at the closing market price of USD 10.00 as of September 01, 2023.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.

How to Read the Charts?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

The reference date for all price data, currency, technical indicators, support, and resistance levels is September 01, 2023. The reference data in this report has been partly sourced from REFINITIV.

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

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