More Upside for SWIR Stock?
Sierra Wireless, Inc. (TSE:SW, NASDAQ:SWIR) has had an amazing run in the past week. Sierra Wireless stock has surged some 22%, reaching its highest price so far this year.
Sierra Wireless postponed some 4G connections for notebook contracts and delayed important contracts for the auto industry, which forced SWIR stock to lose some 60% over the past 12 months. But the company is one of the pioneers and leading players in the “Internet of Things” (IoT) space and appears to be turning around.
The IoT sector of technology is still in its infancy and Sierra stock represents one of the best opportunities in this space. You can find Sierra Wireless’ technology in nearly everything, from coffee makers to the new wave of electric cars, including those from Tesla Motors Inc (NASDAQ:TSLA).
Sierra Wireless develops 2G, 3G, and 4G wireless modules and gateways. It supplies devices to original equipment manufacturers (OEMs) from its three divisions: OEM Solutions, Enterprise Solutions, and Cloud and Connectivity Services.
IoT itself is essential in driving forward one of the biggest emerging IT sectors. It is the “tool” to move the cloud beyond the traditional data center and traditional devices. As the industry moves forward, it’s best to keep in mind that small IoT devices can have big real-world consequences—and the potential to make big money.
Like all new technologies, however, stocks related to the Internet of Things can be volatile. IoT technology is still new and few companies have yet exploited its potential. This leaves the markets suspicious.
Still, the tide is changing. Sierra made its huge market move even after delivering 5.1% lower quarterly revenue year-over-year. Having said that, the company also saw 92% higher revenue from cloud computing.
The cloud, in fact, has just witnessed its highest year-over-year growth in history, generating $604 million in revenue. Yet the technology is still new and Sierra, given its market positioning and potential, has bullish prospects. Data management and security services alone are going to be huge for IoT companies like Sierra. (Source: “Facing Reality: Most Enterprises Will Have to Deploy IoT Infrastructure on the Cloud,” ITBusinessEdge, May 3, 2016.)
Ultimately, Sierra beat expectations and overcame a psychological barrier. Investors had feared worse and the fact that Sierra managed to beat the Street’s consensus on earnings and revenue prompted a collective sigh of bullish relief. (Source: “Cormark Securities: we’re back on board with Sierra Wireless,” Cantech Letter, May 6, 2016.)
The bottom line for Sierra comes from its guidance for the second quarter. Sierra expects earnings per share to fall between $0.09 and $0.17. The latter figure is well above the consensus estimate of $0.14. Revenue guidance of $150.00 million to $160.00 million also beats the consensus expectation of $154.13 million. (Source: “Here’s Why Sierra Wireless, Inc (SWIR) Stock is Surging Today,” Bidness Etc, May 6, 2016.)