Ribbon Communications Inc: 5G Stock Up 76% YOY & Could Still Double

Ribbon Communications Stock Gets Bullish Call From Wall Street

Ribbon Communications Inc (NASDAQ:RBBN) is a 5G stock that could surprise investors to the upside. Not that it has anything to prove to the naysayers. In 2020, RBBN stock soared by 111%, and that momentum carried into 2021.

As of this writing, Ribbon Communications stock is trading at $7.59, its highest level in about three years. It has advanced 76% year-over-year and 15.7% year-to-date.

That doesn’t mean there aren’t opportunities for further growth. RBBN stock is down by 32% from its February highs and it needs to climb by 180% to get to its July 2014 record high of $21.25.

There are more than enough reasons to be bullish on Ribbon Communications stock.

Advertisement

For starters, Ribbon Communications Inc reported solid first-quarter results that were in line with expectations, save for its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which came in above estimates, and earnings per share (EPS), which came in at the high end of the estimate range.

Management also provided strong guidance for the second quarter and maintained their full-year guidance.

Despite the big gains RBBN stock has made over the last year, Wall Street still sees massive upside. Of the analysts covering Ribbon Communications Inc and providing a 12-month share-price forecast, their median target is $13.00, which points to 73.3% upside. The high estimate is $13.50, which suggests 80% growth from the current level.

Wall Street analysts tend to be overly cautious, though. A more aggressive 12-month share price target of $15.00 seems more appropriate.

Chart courtesy of StockCharts.com

RBBN Stock Overview

Ribbon Communications is a global provider of communications technology for telecommunications, wireless, and cable service providers. The company helps businesses modernize, secure, and optimize their real-time communications infrastructures. (Source: “Corporate Brochure,” Ribbon Communications Inc, last accessed June 3, 2021.)

The company operates through two segments: Cloud and Edge, and Packet Optical Networking.

The Cloud and Edge segment provides software and hardware products that enable Voice over Internet Protocol (VoIP) communications, Voice over Long-Term Evolution (VoLTE) communications, voice over 5G communications, and unified communications and collaboration (UC&C).

This segment serves private, public, and hybrid cloud infrastructures, as well as data centers, enterprise premises, and service provider networks.

Ribbon Communications Inc’s Packet Optical Networking segment provides hardware and software solutions for IP networking, switching, routing, and optical transport to support and enable technologies, such as 5G and distributed cloud computing.

This segment serves the utilities, government, defense, finance, transportation, education, and research sectors.

Some of Ribbon Communications Inc’s technology partners are Amazon.com, Inc. (NASDAQ:AMZN), IBM (NYSE:IBM), Intel Corporation (NASDAQ:INTC), and Microsoft Corporation (NASDAQ:MSFT).

Great Start to 2021

For the first quarter ended March 31, 2021, Ribbon Communications announced that its revenue climbed by 22% year-over-year to $193.0 million. (Source: “Ribbon Communications Inc. Reports First Quarter 2021 Financial Results,” Ribbon Communications Inc, April 28, 2021.)

The company reported a net loss of $45.0 million ($0.31 loss per share), compared to a first-quarter 2020 net loss of $33.0 million ($0.27 loss per share).

Ribbon Communications reported first-quarter adjusted net income of $5.0 million ($0.03 per share), versus adjusted first-quarter 2020 net income of $1.0 million ($0.01 per share).

Its adjusted EBITDA came in at $20.0 million, double the $10.0 million recorded for the same prior-year period.

Business Outlook

For the second quarter of 2021, Ribbon Communications Inc expects to report:

  • Revenue between $215.0 and $225.0 million, compared to $210.0 million in Q2 2020
  • Adjusted EPS of $0.09 to $0.11, compared to $0.06 in Q2 2020
  • Adjusted EBITDA of $30.0 to $34.0 million, compared to $30.0 million in Q2 2020

For full-year 2021, guidance remains unchanged at:

  • Revenue of $925.0 to $945.0 million, compared to $844.0 million in 2020
  • Adjusted EPS of $0.49 to $0.54, compared to $0.43 in 2020
  • Adjusted EBITDA of $145.0 to $155.0 million, compared to $131.0 million in 2020

Analyst Take

After trending downward for several years, Ribbon Communications stock rebounded in 2020, advancing by 111%. The stock continues to have great momentum.

Thanks to the Ribbon Communications Inc’s strong fundamentals and first-quarter financial results, which included profitability ahead of expectations, RBBN stock’s outlook is bright.