On Nov 26, we maintained our Neutral recommendation on
Novatel Wireless Inc.
), as the company's top and bottom lines missed the Zacks
Consensus Estimate in the recently concluded quarter.
Why the Reiteration?
Going forward, increased demand for mobile broadband will help
Novatel. The company currently serves the three large wireless
operators in the U.S., namely, Verizon Wireless, AT&T and
Novatel's future prospects look promising as it plans to acquire
new customers and launch MiFi products for major telecom
operators. Moreover, higher proliferation of 4G-based devices and
the launch of Windows-8 based devices will further create growth
opportunities for the company in the near future. Furthermore,
the company has commercially launched its CDMA products and is
making strong progress to rollout its HSPA-based products in the
Recently, the company struck a deal with DigiCore Holdings Ltd.,
a leading provider of advanced machine-to-machine (M2M)
communication and telematics solutions, to supply various
versions of Novatel Wireless' advanced MT 3060 OBDII
The company also signed a contract with NexTraq, a leading
provider of fleet management and vehicle tracking solution to
offer MT 3000 that offers GPS and geo-sensing support. It also
signed a long-term deal with RAC Monitoring service to offer
MT3060 telematics devices for vehicle tracking and crash
detection. We believe that if successful, this opportunity will
play a substantial role in the company's M2M business.
MITEL NETWORKS (MITL): Free Stock Analysis
MOTOROLA SOLUTN (MSI): Free Stock Analysis
NOVATEL WIRELES (NVTL): Free Stock Analysis
UBIQUITI NETWRK (UBNT): Free Stock Analysis
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On the flipside, intensifying competition for embedded modules is
a major concern for Novatel. In addition to its traditional
rival, Sierra Wireless, the company is facing significant
challenges from newly launched products by large manufacturers,
including Qualcomm and L.M. Ericsson.
Business performance for Novatel depends on a limited number of
customers, who represent a significant portion of the company's
total revenue. Moreover, the company's business is geographically
less diversified as North America accounts for nearly 97% of
Currently, Novatel Wireless has a Zacks Rank #3 (Hold).
Other Stocks to Consider
Other companies belonging to the same sector are
Ubiquiti Networks, Inc.
Mitel Networks Corp.
Motorola Solutions Inc.
). Ubiquiti Networks has Zacks Rank #1 (Strong Buy) while both
Mitel Networks and Motorola Solutions have a Zacks Rank #2