FEIM Should I Buy
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Frequency Electronics Inc. (FEIM) is not a strong buy for a beginner investor with a long-term strategy at this time. While there are signs of recovery in the business and growth in the order backlog, the company's recent financial performance shows a decline in profitability and margins. Additionally, technical indicators suggest a bearish trend, and there are no strong trading signals or positive catalysts to support immediate action.
The MACD is negative and expanding (-1.32), indicating bearish momentum. RSI is at 27.614, suggesting oversold conditions but not providing a clear signal. Moving averages are converging, showing no strong directional trend. The stock is trading below key support levels (S1: 45.357, Current Price: 44.665).
Growth in the order backlog and a shift toward land-based defense programs are positive signs for the company's long-term prospects. Craig-Hallum's upgraded price target to $46 reflects optimism about the company's recovery potential.
The company reported a decline in net income (-32.14% YoY), EPS (-35.71% YoY), and gross margin (-20.76% YoY) in the latest quarter. Freedom Capital downgraded the stock to Hold, citing temporary weakness in the satellite business. The stock also experienced a significant regular market drop (-5.49%) and is trading below key support levels.
In Q2 2026, revenue increased by 8.26% YoY to $17.13M, but net income dropped by 32.14% YoY to $1.8M. EPS fell by 35.71% YoY to $0.18, and gross margin declined by 20.76% YoY to 38.16%. The financials indicate growth in revenue but a significant decline in profitability.
Freedom Capital downgraded the stock to Hold with a price target of $42, citing temporary business weakness but highlighting recovery potential. Craig-Hallum raised the price target to $46 and maintained a Buy rating, emphasizing strong backlog performance despite an EPS miss.
