Citing improved share positioning and strong demand, Lehman Brothers analysts Tim Luke and Jeff Kvaal upgraded Sierra Wireless (SWIR) to Overweight. They increased CY2007 estimates from $236 million to $241 million, and kept the price target at $16 (1.3X CY 2007 Enterprise Value/Sales). In a note to clients, they summarize:
• Our checks suggest robust carrier optimism on data card sales. We believe leading carriers Verizon, Cingular, Sprint, and Vodafone are all optimistic about data card revenue in 2006 and beyond.
• Market share positioning in the U.S. is stronger than expected. Share at Sprint remains stable vs. our previous thoughts of some ebbing. Share at Cingular continues to remain strong, as recent entry of Option is primarily geared towards international travelers.
• While visibility on size of OEM opportunity is limited, ramp for recent contract wins (Fujitsu and HP) may provide a lift to near term outlook.
• 2006 opps include share gain in Europe, and potential rebuilding of share at VZW through EV-DO Rev A intro.