SDTH

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SDTH: Merriman Starts @ Buy; Analyst Notes
Thursday , May 08, 2008 08:01ET
Issuer: ShengdaTech, Inc. (NasdaqNM: SDTH)
Analyst Firm:  Merriman Curhan Ford & Co.
Ratings Action: INITIATE
Current Rating: Buy

Analyst Comments: The firm is excited about ShengdaTech because of its rapidly growing nano-particle business and the vast market expansion opportunities associated with this business. They believe the company should be able to continue to expand its operating margins as its higher margin revenue grows faster, the new manufacturing facility utilizes lower costs and the company is able to leverage operating expenses. They believe ShengdaTech's high growth markets and leverage in the business model warrant a multiple of 18-22x their out year EPS estimate, implying a potential valuation range of $14-17.