Aviat Networks Inc: 5G Stock Up 100% YTD; 2022 Looks Even Better

Aviat Networks Shrugs Off Volatilty in 2021

In spite of the September slide and ongoing October volatility, Aviat Networks Inc (NASDAQ:AVNW) has been continuing to have a great year.

The overlooked 5G stock has been trouncing the broader market and has seen its share price rally by 100% year-to-date, 217% year-over-year, and 862% since bottoming in March 2020.

Even over the shorter term, AVNW stock has performed better than the S&P 500. Since the start of September, the S&P 500 has tumbled by 4.6%. Over the same time frame. Aviat Networks stock has only fallen by three percent.

In the opening days of October, the S&P 500 slipped by almost one percent. Meanwhile, AVNW stock actually bounced off a support level and climbed by 4.2%.

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Aviat Networks stock has also been significantly outpacing its peers. The Defiance 5G Next Gen Connectivity ETF (NYSE:FIVG) is up by 7.5% year-to-date and 25.5% year-over-year, while the First Trust Indxx NextG ETF (NASDAQ:NXTG) is up by 9.5% year-to-date and 26.5% year-over-year.

Since the start of September, the Defiance 5G Next Gen Connectivity ETF has gone down by more than seven percent and the First Trust Indxx NextG ETF has gone down by 5.5%.

Chart courtesy of StockCharts.com

Part of Aviat Networks Inc’s bullishness lies in the fact that the company recently reported excellent fiscal fourth-quarter and full-year financial results and provided a solid outlook for fiscal 2022.

During fiscal 2021, the company announced a number of key customer wins, including Dish Network Corp (NASDAQ:DISH), LTD Broadband, and Union Wireless. It also reported solid sales growth, margin expansion, expense reductions, and meaningful bottom-line improvements.

Looking forward, Aviat Networks Inc has provided a strong outlook for revenue and for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

Despite the hawkish tone and significant share-price gains, AVNW stock still has legs. It needs to climb by 28% just to get to its April 2021 high of $43.76.

Wall Street is confident it will surpass that level. Of the analysts providing a 12-month price forecast for Aviat Networks stock, their median target is $50.33, with a high target of $51.00, which represents potential upside of 46.1% and 49.3%, respectively.

About AVNW Stock

Aviat Networks Inc supplies microwave networking solutions that are critical for 5G networks, private networks, and rural broadband. (Source: “Aviat Networks (NASDAQ: AVNW): August 2021,” Aviat Networks Inc, last accessed October 6, 2021.)

While 5G presents a large and growing opportunity, rural broadband also provides Aviat with significant growth opportunities.

The company’s end-to-end wireless transport solutions consist of radios, routers, software, and services. Aviat Networks Inc’s products are used by the offshore oil and gas industry, transportation companies, schools, Internet service providers, high-frequency traders, government agencies, and broadcast network operators around the world.

The company has more than 3,000 customers. Since the start of fiscal 2020, Aviat Networks Inc has inked more than 100 new rural broadband accounts.

The company’s customers include Motorola Solutions Inc (NYSE:MSI), Verizon Communications Inc. (NYSE:VZ), Virginia State Police, the City of San Jose, Broward County Florida, and the State of Colorado.

Great Q4 Results

For the fourth quarter of fiscal 2021, ended July 2, Aviat Networks announced that its revenue increased by 14% year-over-year to $71.7 million. (Source: “Aviat Networks Announces Fiscal 2021 Fourth Quarter and Full Year Financial Results,” Aviat Networks Inc, August 25, 2021.)

Its North American sales went up by 21.4% to $46.4 million, while its international sales climbed by 3.5% to $25.3 million.

The company reported operating income of $3.7 million for the fiscal 2021 fourth quarter, up by 76% from the $2.1 million in the comparable fiscal 2020 period. Its adjusted operating income was $5.6 million, up by 27% from the $4.4 million in the comparable fiscal 2020 period.

Aviat Networks Inc reported fourth-quarter net income of $2.8 million, or $0.24 per share, compared to $1.1 million, or $0.10 per share, in the same prior-year period. Its adjusted net income was $5.3 million, or $0.45 per share, versus fourth-quarter 2020 adjusted net income of $4.1 million, or $0.38 per share.

The company’s adjusted EBITDA for the fiscal 2021 fourth quarter were $7.0 million, compared to $5.5 million in the comparable fiscal 2020 period.

Aviat Networks Inc ended the fourth quarter with net cash and cash equivalents of $47.9 million, compared to $45.8 million as of April 2, 2021 and $32.6 million as of July 3, 2020. The company has no loans outstanding.

For fiscal 2022, the company expects to report total revenue in the range of $283.0 to $293.0 million. At the midpoint, that represents year-over-year growth of approximately five percent.

Aviat Networks Inc also expects to report adjusted EBITDA in the range of $35.0 to $38 million, for a midpoint year-over-year gain of 11.3%.

This outlook is based on the current supply chain environment.

Analyst Take

Aviat Networks Inc is an excellent 5G company that reported record first- and second-quarter results, as well as strong third- and fourth-quarter results.

Management expects that momentum to carry into fiscal 2022 and beyond. Over the next four years, the 5G wireless transport market is expected to grow at a compound annual growth rate (CAGR) of 41%.

Moreover, the company has increased its size in the rural broadband market, which is expected to benefit from government funding and drive long-term growth.

All that is good news for Aviat Networks stockholders.