Sierra Wireless Jumps 12% On Analyst Upgrade

Jun. 6.07 | About: Sierra Wireless, (SWIR)

Shares of modem maker Sierra Wireless Inc. (NASDAQ:SWIR) jumped 12% on Tuesday after CIBC World Markets analyst Ittai Kidron hiked his price target on the stock to US$28 and upgraded his rating from "sector performer" to "sector outperformer."

The company's announcement that its wireless USB Modem, the Sierra Wireless AirCard(NYSE:R) 875U, is now available in the United Kingdom, also probably contributed to investors heightened confidence in the stock.

"We see Sierra benefiting from several catalysts (new products, embedded, machine-to-machine growth), but simply put we believe the overall industry is still at the front of an expansion cycle driven by the adoption of 3G technologies," Mr. Kidron said in a note to clients, adding that increases in third generation penetration will in turn, increase Sierra's market opportunities.

RBC Capital analyst Mike Abramsky, who raised his target to US$24 on Monday, told investors that Sierra's management continues to execute well.

However, he said he remains cautious given competitive threats from low cost Asian offerings and the fact that 45% of the company's revenues come from only two clients, Cingular and Verizon (NYSE:VZ).