Through The Fly's Eyes: Alvarion
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
Comprehensive Wireless Broadband Networking
Businesses requiring wireless broadband network solutions are generally comforted by the knowledge that their provider's equipment is used successfully around the world. There is an outfit in Tel Aviv that provides that level of comfort. Its units are deployed in some 150 countries.
Alvarion Ltd. (ALVR) designs, develops and manufactures wireless broadband access systems. The firm's equipment uses multipoint and point-to-point packet switching technologies for high-speed, broadband Internet, and intranet connections. Products based on WiMAX (Worldwide Interoperability for Microwave Access) standards are a specialty. Customers include cellular operators, competitive local exchange carriers, service providers and regional carriers. The firm has strategic relationships with Alcatel-Lucent (NYSE: ALU) and IBM (IBM). Competitors include Cicso Systems (CSCO) and Nortel Networks (NT).
Alvarion surprised the Street earlier in the month, when it announced Q2 EPS of 3 cents and revenues of $57.6 million. Analysts had been looking for 2 cents and $54.7 million. Management also guided Q3 EPS to 3-5 cents (2 cent consensus) and Q3 revenues to $58-62 million ($55.72 million consensus).
The news kept ALVR shares cycling through a positive twelve-week trading channel. The price subsequently pulled back to the channel base, on the mid-August market decline, but then popped into a bullish "pennant" consolidation pattern with the aid of "buy" recommendations from FTN Midwest (8/16) and CE Unterberg Towbin (8/17). Stocks frequently exit a pennant with a move in the same direction they were traveling when they entered it. In this case, that would be to the upside.
Brokers recommend ALVR with four "strong buys," six "buys" and four "holds." Analysts see a 28% average annual growth rate, through the next five years. The ALVR Price to Sales ratio (3.57) and Price to Book ratio (3.65) compare favorably with industry and sector averages.
Institutional investors hold about 28% of the outstanding shares. Over the past 52 weeks, the stock has traded between $6.03 and $12.59. A stop-loss of $9.95 looks good here.