Five-Star Analyst Thinks Boingo Wireless Stock Makes for a Takeover Target

Boingo Stock Could Be a Takeover Target: Here's WhyBoingo Wireless Inc Up 100%. Could Ride 5G to Bigger Gains

When five-star analyst Timothy Horan from Oppenheimer Holdings Inc. (NYSE:OPY) sets his target on a stock, it’s a good idea to listen, simply because he is a proven stock picker. That’s the case with Boingo Wireless Inc (NASDAQ:WIFI), an operator of over one million public Wi-Fi hotspots found in high-traffic areas such as airports, stadiums, offices, and travel centers.

The operational issues with Boingo have been the company’s inability to deliver profitability amid rising revenues.

While WIFI stock is down 31% over the past year, the shares have more than doubled from their March low of $6.66 and are easily outperforming.

Trading at around $13.00, this stock still has ample room to grow, given that the shares are well off their high of $35.98 in September 2018.

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Chart courtesy of StockCharts.com

Horan believes that Boingo stock could be a takeover target. (Source: “Oppenheimer Sees Good Value in This Cloud Stock,” TipRanks, March 19, 2020.)

This makes sense, since Boingo entered into a venture with 5G mobile leader Verizon Communications Inc. (NYSE:VZ) to make 5G accessible for heavy-traffic indoor venues. (Source: Boingo Wireless Reports Third Quarter 2019 Financial Results,” Boingo Wireless Inc, November 5, 2020.)

Given that Boingo controls the Wi-Fi in many airports and stadiums, this venture could really pay off. Perhaps Verizon may make a takeover move.

Why 5G Could Power Growth for WIFI Stock

Even if Boingo Wireless Inc is not acquired, the company’s fundamentals show growth that could accelerate with the adoption of 5G.

Boingo’s revenues have risen in five consecutive years, nearly doubling. The compound annual growth rate (CAGR) for that period was 17.2%.

Fiscal Year Revenues (Millions) Growth
2015 $139.6
2016 $159.3 14.1%
2017 $204.4 28.3%
2018 $250.8 22.7%
2019 $263.8 5.2%

(Source: “Boingo Wireless,” MarketWatch, last accessed June 22, 2020.)

But given the ongoing pandemic and the negative impact on gatherings and air travel, Boingo will face some tough hurdles. My view, however, is that things will improve.

The company could see its revenues fall by 5.2% to $250.1 million in 2020, which would actually be quite good, given the current economic situation. It helps that the company has existing contracts in place. (Source: “Boingo Wireless, Inc. (WIFI),” Yahoo! Finance, last accessed June 22, 2020.)

Revenues are estimated to rebound 8.7% to $271.9 million in 2021. The move to 5G will help with that.

Along with the revenue growth, Boingo managed to produce positive earnings before interest, taxes, depreciation, and amortization (EBITDA) in five straight years, including strong double-digit growth from 2015 to 2018.

Fiscal Year EBITDA (Millions) Growth
2015 $20.2
2016 $26.6 31.2%
2017 $51.9 95.4%
2018 $79.6 53.3%
2019 $75.4 -5.2%

(Source: MarketWatch, op. cit.)

A major milestone for Boingo Wireless Inc will be achieving profitability. We saw a strong improvement in 2018, before a weaker performance in 2019. The following table shows the company’s generally accepted accounting principles (GAAP) diluted earnings per share (EPS) from the last five years.

Fiscal Year GAAP Diluted EPS Growth
2015 -0.60
2016 -$0.72 -20.0%
2017 -$0.49 32.5%
2018 -$0.03 94.0%
2019 -$0.23 -707.2%

(Source: MarketWatch, op. cit.)

The positive is that Boingo is expected to narrow its loss to $0.17 per diluted share in 2021. (Source: Yahoo! Finance, op. cit.)

Analyst Take

The move to 5G could be a major catalyst for Boingo Wireless Inc. Its venture with Verizon could help drive big 5G growth and, as I said, Verizon could even consider buying a stake in Boingo stock.

Five-star analyst Horan thinks WIFI stock could move higher and, given that 208 institutions own 93.4% of the shares, it’s easy to be confident looking at this tech stock.