KEY POINTS:
A collapse in former NZX darling Rakon's share price belies a company that still has sound growth prospects, analysts say.
Since November, the share price has dropped 60 per cent.
It had been rising since its IPO at $1.60 in May 2006 - at one point touching $5.80 - but closed on Thursday at $2.15, just above its year low of $2.05.
Forsyth Barr senior investment analyst Jeremy Simpson said the strong New Zealand dollar had affected Rakon's earnings and cashflow.
"A number of times now they've had to downgrade their earnings guidance for the year quite considerably, and that's been because the currency stayed stronger for a lot longer than they were expecting. That's really been the driver for it."
It had also faced teething problems with its operations in France. Market sentiment was also unfavourable to companies in Rakon's league, he said.
"Growth companies are not getting recognised in the market as much. People aren't prepared to pay in the share price for growth so a lot of the high growth companies, high P/E [price/earnings] companies have pulled back in price a bit given the uncertainty in the market. [but] ... the underlying core business I assume is going really well.
"There's still strong demand for what they make and they're a market leader in what they make."
First NZ Capital analyst Jason Familton said Rakon was being punished mainly for missing its full-year profit guidance and the negative impact the strong kiwi has had on it.
Its core business, making high-performance crystals and oscillators used in global positioning products worldwide, was more difficult to grasp.
"It's probably a little bit harder to understand for the general public, rather than something like a bank or Air New Zealand, for example, where it's a bit more tangible what they're selling and people can probably relate to it a lot easier.
"It's also selling into markets which are outside New Zealand as well, so is not necessarily impacted by things which are happening here, which people are obviously a lot more familiar with."
Rakon managing director Brent Robinson felt the recent falls in shares to be "undoubtedly market related".
The company has achieved much since listing in May 2006, he said.
"We have delivered very strong financial results in a difficult exporting environment - the first 12 months were well in excess of market expectations reflecting the strong market position we have established and continue to hold."
It has also diversified its portfolio of products beyond GPS. It was also well-poised to capitalise on growth opportunities in China and India.
A joint venture with Indian company Centum Electronics was going well, and a manufacturing base in China was expected to begin production next year.
