Aviat Networks Inc: 5G Stock Is Bullish Following Strong Fiscal Q2 Results

Wall Street Has Bullish Outlook for Aviat Networks Stock

There are spotlight-hogging 5G companies and there are companies that quietly support 5G networks. Aviat Networks Inc (NASDAQ:AVNW) is an ignored 5G company that has consistently reported solid financial results and guidance.

AVNW stock has been quietly trouncing the broader market. It rallied by 86% in 2021 and, as of this writing, it’s up by 57.1% year-over-year.

Aviat Networks stock might be down by 3.1% so far in 2022, but that’s far better than the Nasdaq, which has lost 10% of its value this year, and Defiance Next Gen Connectivity ETF (NYSE:FIVG), which has gone down by eight percent.

AVNW stock’s outlook for fiscal 2022 is bullish.

Advertisement

Why?

For starters, Aviat Networks Inc reported strong fourth-quarter and full-year results for fiscal 2021, which ended July 2, 2021. Aviat Networks Inc reported solid sales growth, margin expansion, expense reductions, and meaningful bottom-line improvements.

Also in fiscal 2021, the company announced key customer wins: DISH Network Corp (NASDAQ:DISH), LTD Broadband, Nextlink Internet, and Union Wireless.

That momentum carried into fiscal 2022 with strong first-quarter results, which, like Aviat Networks Inc’s fiscal 2021 results, showed meaningful bottom-line improvements.

Then, on February 2, the company continued to show its winning ways with a fabulous second-quarter report, which was juiced, in part, by international customers preparing for 5G deployment.

Aviat Networks Inc’s robust numbers have caught the attention of Wall Street analysts, who have an average 12-month share-price target of $54.67. Considering Aviat Networks stock’s current level, that points to upside of 76.7%.

Chart courtesy of StockCharts.com

About AVNW Stock

Aviat Networks Inc supplies microwave networking solutions that are critical for wireless 5G networks, private networks, and rural broadband.

5G presents a large and growing opportunity for Aviat, but so does rural broadband. The company has added more than 150 new rural broadband accounts since its fiscal 2020. (Source: “Investor Presentation: February 2021,” Aviat Networks Inc, last accessed February 3, 2022.)

The company’s end-to-end wireless transport solutions portfolio consists of radios, routers, software, and services.

Aviat Networks Inc’s products are used by offshore oil and gas companies, transportation companies, schools, Internet service providers, high-frequency traders, government agencies, and broadcast network operators around the world.

The company’s global base of more than 3,000 customers includes Motorola Solutions Inc (NYSE:MSI), Safaricom, the State of Colorado, Verizon Communications Inc. (NYSE:VZ), and Wisper Internet.

Another Great Quarter

Aviat Networks Inc’s fiscal 2022 second-quarter results included year-over-year increases in quarterly revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

For the second quarter ended December 31, 2021, the company announced that its total revenue increased by 10.4% year-over-year to $77.9 million. (Source: “Aviat Networks Announces Fiscal 2022 Second Quarter and Six Month Financial Results,” Aviat Networks Inc, February 2, 2022.)

Aviat Networks’ North American revenue was up by 3.8%, while its international revenue was up by 25.5%.

Aviat Networks Inc’s second-quarter 2022 net income came in at $5.9 million, or $0.49 per share, compared to second-quarter 2021 net income of $6.6 million, or $0.58 per share. On an adjusted basis, its second-quarter 2022 net income was $8.5 million, or $0.71 per share, versus $8.4 million, or $0.74, in the comparable period of fiscal 2021.

Aviat Networks Inc ended the second quarter of fiscal 2022 with cash and cash equivalents of $42.3 million. Of particular note, the company has no outstanding loans.

Also during the second quarter of fiscal 2022, the company repurchased $1.9 million of its own common stock and announced a new $10.0-million stock repurchase plan. This plan replaces the previous $7.5-million Aviat Networks stock buyback program, which the company exhausted.

Moreover, the company launched “Multiband XD,” which increases link distance and improves Aviat’s position compared to fiber.

Analyst Take

As explained above, Aviat Networks Inc is an excellent 5G company that continues to report solid financial results.

During its second quarter of fiscal 2022, the company executed key long-term strategic objectives, which resulted in year-over-year increases in revenues and adjusted EBITDA.

Thanks to its rock-solid balance sheet and liquidity, Aviat Networks Inc is well positioned to take advantage of the growing 5G wireless transport and rural broadband markets.

All that points to the likelihood of AVNW stock going up in value.