Shares of global-trade-management company Vastera Inc. pulled back on Nasdaq yesterday following steady gains last week after it announced contract awards with two Canadian manufacturers.
The Sterling, Va., company was selected by auto-parts manufacturers Autoliv Electronics Canada Inc. and Nemak to provide managed services for plant operations. It did not disclose the terms of the deals.
At Autoliv’s Markham plant in Ontario, Vastera will handle the manufacturer’s classification, broker management, trade compliance with the North American Free Trade Agreement and duty management. Vastera will run the export and import division at Nemak, Canada’s largest manufacturer of aluminum auto parts.
The pacts put the company on track to reach $84 million to $88 million in revenue by the end of the year, said Mark Ferrer, president and chief executive officer. Vastera stock closed yesterday at $6.34, up 9 percent from a week earlier at $5.82. The price hit $6.65 on Friday.
“We’re not only expanding in our automotive-software platform, but looking to market our services to consumer-packaged goods and chemical manufacturers,” Mr. Ferrer said.
The company also is targeting companies expanding their operations to China as part of an expansion into Latin America, Asia and Europe.
But several analysts remained cautious about the company.
“They’re having a hard time growing the model to sign more major outsourcing projects,” despite dominating the trade-management market, said Patrick Walravens, a senior research analyst with JMP Securities, a San Francisco brokerage firm.
Mr. Walravens, who advised investors to hold their stock, said the company relies too heavily on Ford Motor Co., its largest customer, and Lucent Technologies for revenue growth.
“Vastera will have to get more major projects — and not just manufacturers biting little chunks of the project — to show some real growth,” he said.
Mr. Walravens and his employer do not own any Vastera stock.
Peter Coleman, an analyst with Connecticut brokerage firm SoundView Technology Group, noted that the weak economy has kept many companies from making large investments in outsourcing their trade operations.
But the demand for trade-compliance management is higher because of heightened security and regulations at the borders, Mr. Coleman said, rating the stock “neutral.” Mr. Coleman owns about 1,000 shares of Vastera.
Robin Roberts, a research analyst with Little Rock, Ark., investment bank Stephens Inc., said the company must improve its earnings base before she will change her “overweight” rating of the stock.
In the first quarter ended March 31, Vastera posted $20.9 million in revenue from 19 deals, up 10 percent from $19 million a year earlier.
The 25 percent jump in managed-services deals to $13.6 million lowered the company’s loss to $878,000 (2 cents per share) from $2.2 million (6 cents) the previous year.
“In the long term, there is a lot of growth opportunity available to Vastera, but the near-term market continues to be quite choppy for them,” said Ms. Roberts, who does not own any Vastera stock.