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Ceragon Networks (NASDAQ: CRNT) provides microwave transmission terminal hardware and network management software that enable wireless service providers to deliver voice, Internet browsing, music and video applications. The firm's systems are used by more than 150 service providers and hundreds of private networks, in 85 countries. Ericsson (NASDAQ: ERIC) is a major competitor.
Investors were pleased earlier in the week, when the company reported Q3 EPS of 13 cents and revenues of $44.5 million.
The Street had been looking for 12 cents and $39.3 million. Management also guided FY07 revenues to about $159.4-$162.6 million, versus Street consensus of $151.76 million. Broadpoint Capital subsequently reiterated a "strong buy" on the stock and declared a price target of $25. RBC Capital Markets reiterated an "outperform" and declared a $22 target. The stock popped on the news and then passed into a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
Brokers recommend the shares with one "strong buy," four "buys," four "holds" and a "sell." The CRNT Sales Growth rate (45.90%) and EPS Growth rate (116.67%) compare favorably with industry, sector and S&P 500 averages. Institutions own about 33 percent of the outstanding shares. Over the past 52 weeks, the stock has traded between $4.97 and $21.89. A stop-loss of $15.95 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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