RBC analyst ups Sierra Wireless price target to $13 US, up from $12US Craig Wong, Canadian Press
Published: Friday, January 27, 2006 Article tools
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VANCOUVER (CP) - Investors cheered Sierra Wireless Inc. (TSX:SW) on Friday, a day after the company reported a small quarterly profit and said it expected revenues to grow to $40 million in the first quarter of this year.
Shares in the wireless equipment maker company gained six per cent or 91 cents to close at $15.09 on the Toronto Stock Exchange.
RBC analyst Mike Abramsky raised his price target on the stock to $13 US, up from $12 US on the company, however he said he remained cautious and maintained a "sector perform" rating on the stock with "above average" risk.
"Given customer concentration and that Sierra Wireless may be benefiting from short term catalysts, and view the PC card market as moving to favour vendors with a lower cost structure, which may threaten Sierra Wireless's margins and/or growth," Abramsky wrote in a note to clients.
He said the key question will be how large and how long the company will be able to grow before increasing competition begins to erode margins.
"It is possible that Sierra Wireless's advantages may diminish in the face of 'good enough' competitive offerings," Abramsky wrote.
In its outlook for the first quarter of 2006, Sierra Wireless said it expects to lose $800,000 US or three cents per share in the first quarter on revenue of $40 million US.
The revenue forecast was ahead of the average analyst estimate of $37 million US according to Thomson Financial.
On Thursday, the Vancouver-based company, which keeps its accounts in U.S. dollars, said it earned $911,000 US or four cents per share in the three months ended Dec. 31. That compared with a profit of $7.3 million or 28 cents per diluted share a year earlier.
Revenue fell to $37.6 million from $58.8 million.
The average analyst estimate according to Thomson Financial had been for the company to lose six cents per share on $35 million in revenue.
Sierra Wireless announced earlier this month its embedded module has been chosen to provide mobile broadband connectivity on a new HP Compaq laptop computer.
It did not provide financial details of the deal. |
