() had its “buy” rating reiterated at H.C.Wainwright after the provider of wireless broadband access solutions crushed the brokerage’s $34 million top-line estimate yesterday by reporting $44.3 million in the third quarter.
H.C.W’s analyst Kevin Dede said he had expected September to not include sales of the newly launched Jetpack (MiFi 6620) at Verizon but “apparently” some revenue was recognized in concert with continued sales of the legacy 5510 device as mobile computing sales drove the outperformance.
“Interestingly and importantly” wrote Dede in a research note to clients today “Mashinsky temporary CEO since mid-June now has a permanent appointment an event anticipated as an extended contract was mandated by clause in the company's recent capital raise.”
Dede said that while a solid portion of the impressive sales gain was earlier-than-expected 6620 revenue recognition “we see the improvements in expense control new initiative launches brand management and positive morale as game changing at Novatel and early vindication of our support of Mashinsky.”
Novatel issued thorough guidance for the current quarter that included revenue in the $50-55M range and EPS of negative $0.03 or higher.
“Substantiating the thinking behind the move is clearly what's important. With far more visibility to its end customer demand (still predominantly Verizon) management is clearly more comfortable in extending an objective to Wall Street” Dede wrote.
“However we imagine management sees it as a hurdle to surpass in convincing investors that its newly energized strategy is effecting tactically visible results.”
H.C.W revised upwardly its fourth-quarter estimate to $52 million and negative $0.02 up from previous $34 million and negative $0.16.
“Next year is more interesting as we're comfortable with sales at the 11% growth now built into our $202 million top line but given expense cuts and margin improvement are raising our EPS loss to $0.12 from $0.45” said Dede.
Shares of Novatel have rallied 47 percent so far this year giving the company a market value of $118.8 million. The stock was up 13 percent at 1:40 p.m. in New York today.
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