The share price of Alvarion (Nasdaq: ALVR; TASE: ALVR) continues to rise strongly on the back of the company's huge contract win in the US. After a 10.8% advance yesterday, the share price is currently up a further 8.14%, at NIS 16.55. That makes it a 30% rise in three days. In New York yesterday, Alvarion closed at $4.2, giving a market cap of $265 million.
Oscar Gruss, which rates Alavrion "Buy", has raised its price target from $4 to $6, saying "We continue to view the stock as a compelling long term risk/reward opportunity."
"We view Alvarion’s over $100 million win as a major cornerstone for the company. We believe The Rural Utilities Service project, one of the largest WiMAX deployments to date, endorses Alvarion’s rank among the top three brands in the industry," analysts Jonathan Kreizman and Ziv Tal write.
"Alvarion’s 5- year contract with Open Range Communication in the US comes on the heels of the US administration’s broadband stimulus plan. We anticipate initial shipments in the third quarter, and a stronger build-up in the fourth quarter. Thus we expect a direct bearing of $20 million in revenues for 2010, with a minor markup in OpEx. We expect the revenues distribution to be broadly maintained at $20 million sales per annum, over the remaining 4 years."
Oscar Gruss projects EPS for Alvarion of $0.30 in 2010, a quantum leap from the current year projection of $0.03.
"We believe the government funded initiative further validates WiMAX’s business case as the preferred broadband vehicle in rural and underserved areas. Although we are currently unaware of initiatives of similar magnitude underway, we note the growing likelihood of additional government-backed ventures to follow suit in N.America and Europe. With the current Rural Utilities Service project under its belt, we consider Alvarion’s competitive standpoint substantially improved," the analysts conclude.
Published by Globes [online], Israel business news - www.globes.co.il - on June 18, 2009
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