Syniverse Holdings: Shares in bullish 'flag' consolidation

Posted Jan 22nd 2008 5:03PM by Larry Schutts
Filed under: Analyst Upgrades and Downgrades, Good news, AT and T (T), Sprint Nextel Corp (S), Verizon Communications (VZ), Technical Analysis, Stocks to Buy

Syniverse Holdings (NYSE: SVR) provides a variety of technology services to wireless telecommunications companies. Those services enable phone number portability; fraud management; the invoicing and settlement of wireless roaming calls; and the routing and translation of services between carriers. The company also offers data clearing and financial clearing services. Customers include AT&T (NYSE: T), Sprint Nextel (NYSE: S) and Verizon Communications (NYSE: VZ).

The firm pleased investors last week when it said it expected fourth-quarter revenues to fall in the range of $369-$371 million. That topped the consensus Wall Street estimate of $363.4 million. Management also said it expected FY08 revenues of $425-$440 million ($405.72M consensus) and FY08 free cash flow of more than $100 million. Wedbush Morgan subsequently reiterated its "strong buy" recommendation and boosted its price target to $23. SVR shares popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the shares with five "strong buys," one "buy" and five "holds." Analysts expect a 14 percent growth rate through the next year. The SVR P/E ratio (11.00), PEG ratio (0.95), Price to Book ratio (2.34), Price to Cash Flow ratio (7.72), Price to Free Cash Flow ratio (12.19), EPS Growth rate (22.22%), Operating Margin (26.45%), Net Profit Margin (26.22%), Return on Assets (11.97%), Return on Investment (12.71%) and Return on Equity (23.55%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 37 percent of the outstanding shares. Over the past 52 weeks, the stock has traded between $9.93 and $19.04. A stop-loss of $13.40 looks good here. Note that the firm is expected to report Q4 results on February 19th, after the close.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.

Tags: flag, fundamental analysis, FundamentalAnalysis, momentum, SVR, Syniverse Holdings, SyniverseHoldings, technical analysis, TechnicalAnalysis