Expanding Communications

Written by GSCR Staff   
Friday, 22 February 2013 12:21

Aviat Networks, Inc. (NASDAQ – AVNW - $3.67) looks like a solid play in the communications industry as the company continues to expand into new markets.  Aviat is a leader in microwave networking and designs, manufactures, and sells a variety of products, solutions, and services in North America and internationally in the growing IP-centric, multi-Gigabit data services industry.  The company has installed 750,000 systems worldwide and provides LTE-proven microwave networking solutions to mobile operators, including some of the largest 4G/LTE networks in the world.

The company continues to expand its products and aggressively grow.  Earlier this month the company reached a deal with MTN Ghana to provide its Spares Management and AviatCare services further strengthening its relationship with MTN.  Also this month AVNW announced a partnership with Middle East Telecommunications (METCO) to upgrade the backhaul network for Zain, the leading and rapidly growing telecommunications company in Kuwait.  Aviat and Zain have had a partnership since 2004, as Zain has used Aviat’s Eclipse platform for microwave backhaul.  Finally, the company booked an order worth over $10 million for a combination of microwave backhaul equipment and services to support the public safety network to an undisclosed very large US city.

The charts look bullish in the short term for AVNW as the stock approaches a 52-week high of $3.90.  Additionally, the company announced positive results in for 2Q13 a few weeks ago highlighted by better than expected revenue of $129 million and gross margin of 30%, up from $115 million and 29% in 1QY13 respectively.

We think the organic and repeat customer growth makes AVNW a good buy.  Look for the stock to reach $5 in 2Q13.

Have a great day.

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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