Cambium Networks Corp: 5G Stock’s Recent Dip Has 73% Upside

Cambium Networks Stock Bullish on Record Results & 5G Rollout

Cambium Networks Corp (NASDAQ:CMBM) is an excellent 5G stock that has made huge gains over the last year. Thanks to record financial results, robust product offerings, and the ongoing rollout of 5G networks, CMBM stock has lots of room to run.

Cambium Networks stock is up by 95% over the last six months, 88% year-to-date, and 712% year-over-year.

Trading at $47.30 as of this writing, CMBM stock still needs to climb slightly more than 40% to reach its April all-time high of $66.40. The conservative analysts on Wall Street think it will get there sooner rather than later.

Of the analysts providing a 12-month price forecast for Cambium Networks Corp, their average share-price target is $66.17, which points to 37.9% upside. The high estimate is $74.00, which suggests that Cambium Networks stock could climb by an additional 56.5% from its current level.

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As I’ve mentioned before, Wall Street is overly cautious, so a 12-month price target of $82.00 is certainly within reach. That would mean CMBM stock would rise by 73.5% from its current level.

There is reason for that optimism. Cambium reported great first-quarter results, which included record revenue, operating margin, net income, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). The company also provided strong second-quarter and full-year guidance.

Moreover, Cambium Networks Corp’s next wave of 5G-focused wireless infrastructure products are expected to hit shelves over the next few months.

Chart courtesy of StockCharts.com

CMBM Stock Overview

Cambium Networks is a leading global provider of wireless broadband infrastructure products for network operators, including medium-sized wireless Internet service providers, enterprises, and government agencies. (Source: “Cambium Network: Second Quarter 2021,” Cambium Networks Corp, last accessed June 10, 2021.)

The company’s products and services include intelligent radios, smart antennas, radio frequency (RF), algorithms, wireless-aware switches, and cloud-based network management software.

The company’s wireless technologies, including point-to-multi-point, multi- gigabit wireless, and enterprise Wi-Fi 6 solutions, continue to build momentum.

Cambium will be launching its highly anticipated 28 GHz 5G products for fixed wireless, which expands its serviceable market, over the coming months.

Cambium Kicks Off 2021 With Record Results

For the first quarter ended March 31, 2021, Cambium Networks announced that its revenue increased by 46% year-over-year and seven percent sequentially to a record $88.5 million. (Source: “Cambium Networks Reports First Quarter 2021 Financial Results,” Cambium Networks Corp, May 6, 2021.)

The record results were fueled by high demand for wireless broadband connectivity, the need for improved networking infrastructure, and the company’s launch of new products.

Cambium’s first-quarter gross margin was 49.9%, compared to 50.7% in the same period of the previous year and 50.1% in the fourth quarter of 2020. Its adjusted gross margin was 50.1%, compared to 51.0% in the first quarter of 2020 and 51.2% in the fourth quarter of 2020.

The company reported record first-quarter operating income of $13.4 million, compared to $400,000 in the first quarter of 2020 and $11.4 million in the fourth quarter of 2020.

Cambium Networks Corp’s adjusted operating income was a record $15.5 million, compared to $3.0 million in the first quarter of 2020 and $13.3 million in the fourth quarter of 2020.

Those winning ways continued with record first-quarter net income of $19.9 million ($0.70 per share), compared to a first-quarter 2020 net loss of $800,000 ($0.03 loss per diluted share). For the fourth quarter of 2020, the company reported net income of $10.5 million ($0.38 per diluted share).

Cambium Networks Corp’s adjusted net income in the first quarter of 2021 was a record $11.7 million ($0.41 per diluted share), compared to $1.4 million ($0.05 per diluted share) in the first quarter of 2020 and $10.7 million ($0.38 per diluted share) in the fourth quarter of 2020.

For the first quarter of 2021, Cambium reported record adjusted EBITDA of $16.5 million (18.6% of revenues), compared to $4.4 million (7.3% of revenues) in the first quarter of 2020 and $13.9 million (16.8% of revenues) in the fourth quarter of 2020.

Analyst Take

Cambium Networks Corp is an excellent 5G company with a solid balance sheet and popular 5G products that will be even more popular as the demand for higher broadband increases.

The company reported record first-quarter results and provided strong guidance.

Its second-quarter revenue is expected to climb between 36% and 44.5% and its adjusted EBITDA is expected to climb between 61% and 92%. For fiscal 2021, Cambium expects its revenue to climb between 24% and 29% and its adjusted EBITDA to climb between 15% to 17%.