Sale talk boosts Charles
Shares of gem maker Charles & Colvard advanced in trading Tuesday after an analyst said the company could be an acquisition target.
Eric Wold of Merriman Curhan Ford & Co. said potential buyers would be interested in Charles & Colvard's inventory as well as the value of the patents on its product. The company could get snapped up at between $3 and $5 a share, Wold said - a high premium to the current price of the stock, which is trading near the 52-week low of $1.20.
Charles & Colvard, headquartered in Morrisville, manufactures a man-made gem known as moissanite that's similar to a diamond. Sales to wholesalers have slipped in recent quarters as retailers sold fewer pieces of the jewelry, leaving the company stuck with high levels of inventory cash advance flexible payments.
But a company interested in buying Charles & Colvard would want to turn that inventory into wholesale value, Wold writes in a note to clients. Further, a company that was willing to put money into an advertising campaign for moissanite could find the patents on the product valuable.
Shares of Charles & Colvard (Nasdaq: CTHR) closed up 3.2 percent, to $1.28, in trading Tuesday.