Matthew Hoffman at Cowen and Company sees at least a 50% appreciation on Novatel Wireless Inc. (NVTL) shares from current prices as 2Q09 beat consensus and additionally raised its outlook. The company reported revenues of $84.1MM versus $77MM consensus.
"We are raising our FY09 EPS to $0.30 from $0.25 and now see C09 MiFi shipments exceeding 550K. We note the company posted EPS of $1.42 in FY07 at the height of its USB product cycle and we believe the MiFi cycle will prove at least as compelling as the USB cycle."
The Company has done a fantastic job at migrating from the sale of embedded modems for Amazons Kindle to the hot MiFi product. Hoffman believes MiFi is superior to other portable hotspots that are currently entering the market.
"Novatel’s MiFi personal hotspot device now has >$100MM in customer orders, more than making up for the Kindle loss in forward embedded sales. We continue to see MiFi as a breakout product with approx a 6-month time to market advantage."
If Novatel's MiFi IPR proves to be a greater barrier to competetion, the time to market lead could very well exceed the 6-month period.
DISCLOSURE - No position