Ceragon in $60m India backhaul orders for IP-20 platform despite Lowered Stock Rating

Israeli wireless backhaul specialist Ceragon Networks Ltd., has been selected again by a tier 1 mobile operator in India, placing over USD 60m in new orders so far in 2017 to expand 4G LTE service coverage and increase network capacity, the company said.

Though the identity of the Telco was not revealed, the delivery requirements for these orders and Ceragon´s understanding of the customer´s aggressive network expansion goals, the company´s preliminary expectation for revenues in the first half of 2017 has been increased by USD 20 to USD 25m, with most of the impact expected in the second quarter of 2017.

During its most recent results conference call in November 2016, management indicated that revenues were expected to stabilize in a quarterly range of around USD 75 to USD 80m over the next several quarters, with the possible exception of a seasonal dip (referring to typical seasonality in the first quarter). The significance of these orders serve to increase Ceragon management´s confidence that it can reach or exceed its previously stated goal of a 40% increase in non-GAAP net profit for 2017 compared to 2016.

The IP-20 Platform enables the operator to connect 4G LTE sites across the network, delivering HD multimedia services across India to subscribers. The new wave of IP-20 Platform wireless backhaul deployments aims to support the mobile operator´s goal to vastly increase 4G service coverage and increase network capacity.

Ceragon Networks helps operators and other service providers worldwide increase operational efficiency and enhance end customers´ quality of experience with innovative wireless backhaul solutions.

More importantly for Ceragon is the fact that this is happening despite being downgraded by Zacks Investment Research from a “strong-buy” rating to a “hold” rating in a report issued on Monday.

According to Zacks, “Ceragon Networks Ltd. is a leading provider of high-capacity wireless backhaul solutions for cellular and fixed wireless operators, enterprises and government organizations. Ceragon’s modular FibeAir product family is recognized as the gold standard for backhaul transmission and is also one of the top solutions chosen by cellular operators for SONET/SDH rings. A scalable, future-proof solution for wireless transport of broadband services, FibeAir operates across multiple frequencies for IP and SONET/SDH protocols, supporting the emerging needs of next-generation networks that are evolving to all-IP based services, including triple-play. It leads the market in IP backhaul, offering a unique, native IP solution that provides the efficient, robust connectivity required for WiFi, WiMAX and converged networks.”

Ceragon Networks has a 1-year low of $0.89 and a 1-year high of $3.88. The stock’s 50 day moving average is $2.74 and its 200 day moving average is $2.43. The stock has a market capitalization of $263.44 million, a price-to-earnings ratio of 34.24 and a beta of 1.16.

Ceragon Networks last posted its quarterly earnings data on Monday, November 14^th 2016. The company reported $0.06 EPS for the quarter, beating analysts’ consensus estimates of $0.04 by $0.02. The company had revenue of $79.13 million for the quarter, compared to analyst estimates of $77.57 million. Ceragon Networks had a net margin of 3.23% and a return on equity of 6.93%.

Ceragon Networks’s quarterly revenue was down 7.3% on a year-over-year basis. During the same period in the previous year, the business posted $0.05 earnings per share. On average, equities analysts forecast that Ceragon Networks will post $0.14 EPS for the current year.