On Aug 29, 2013, we reiterated our long-term Neutral
Novatel Wireless Inc.
). The stock price soared 167% in the last year. We believe
Novatel is currently fairly valued. Currently, Novatel carries a
Zacks Rank #3 (Hold).
Why Kept at Neutral?
Increased demand for mobile broadband will bode well for
Novatel going forward. The company currently serves the three
large nationwide U.S. wireless operators, namely,
Verizon Communications Inc.
). Verizon will soon launch MiFi 4620 LE with an extended battery
pack. AT&T is using MiFi 2 products. Recently, Novatel
introduced MiFi 500 LTE with Sprint.
Within the M2M space, Novatel is concentrating on Commercial
Telematics, Asset Tracking, Aftermarket Consumer Telematics and
Fixed Telemetry. The company's direct-to-enterprise sales policy
and several product introductions in the last few months led to
the success of its commercial telematics and Asset Tracking
Novatel is also undergoing product trials with several
national and international customers and is involved in different
stages of sales negotiations with insurance service companies for
a large number of opportunities in Commercial Telematics. We
believe that if successful, this opportunity will play a
substantial role in the company's M2M business.
On the other hand, Novatel reported disappointing financial
results for the second quarter of 2013. Both the top line and the
bottom line fell below the respective Zacks Consensus
This weakness was mainly dueto subdued performance of the
Mobile Computing Product segment. Suffering continuous
losses may jeopardize Novatel's balance sheet in the near future.
Competitions from low-cost Asian manufacturers coupled with a
limited customer base are also significant headwinds.
NOVATEL WIRELES (NVTL): Free Stock Analysis
SPRINT CORP (S): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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