Sonus Breaks Above Its Highest Level Since July

Sonus Networks Inc. (SONS) broke out above $7.20, its highest level since a late July decline that took the stock from $8.28 to a summer low of $5.17. Sonus shares rose by $0.25, or a healthy 3.56%, to $7.27 on moderate volume of 5.9 million shares (avg. daily volume stands at 5.1 million). The stock is now much closer to approaching its 200 day moving average at $7.36, a crucial barrier that if punched through could make way for Sonus shares to fill a huge chart gap that exists from the earnings warning/options restatement announcement on July 25.

At the time, Sonus reported ahead of its August earnings call that first-half revenue would grow only 16% to 18% from the same period last year, and that it expected to record additional stock-based compensation expenses stemming from its stock options review. The stock was pummeled from a close of $8.28 the previous day to $5.90 on volume of 64.5 million shares. But things are different this time around, and spearheading the momentum is a recent upgrade from Piper Jaffray analyst Troy Jensen who raised his rating on Sonus from "outperform" to "buy," and upped his price target to $8. Jensen noted that,

Sonus is one of the best positioned companies in the VoIP equipment market and the company's dominant position in high-density media gateways is a clear reflection of its superior technology.

Jensen wrote in a client note that the demand for Sonus products has grown tremendously which should fuel fourth quarter results, and drive revenue over $100 million. Sonus will offer future guidance and report third quarter results on November 8. Earnings are expected to come in at $0.01 per share on revenue of $75.8 million.