Fingerprint’s Q1 sales were SEK 343m, up 18% y/y, marking the first quarter of yearly revenue growth since 2016. The gross margin came in at 23.0%, 2.2 pp below consensus, albeit with a more promising outlook given. We increase our estimates for 2019 revenue thanks to stabilising market conditions in capacitive sensors.
We also see improved gross profit from the higher share of high-margin sensor FPC1511, but we reduce our long-term estimates for in-display sensors due to its late entrance to the market and need to play catch-up. We trim our EBIT estimates by 3.3%, 2.7% and 2.5% for 2020-22, respectively, and our new DCF-derived fair value range lands at SEK 8.1-15.5 (8.3-16.0).
The stock was shorted by around 8% of its market cap ahead of the report, leading to a short squeeze. However, our fundamental view has not changed materially and justifying a higher price would require a brighter outlook than we assume either for the in-display sensor or the smartcard business. Marketing material commissioned by Fingerprint Cards.