UPDATE: Jefferies Downgrades Powerwave Tech, Lowers PT
February 15, 2011 10:34 AM
Jefferies sees three secular growth themes and believes that Powerwave Tech. (NASDAQ: PWAV) is a play on: Tablets, smartphones, and Wi-Fi devices cannibalize PCs and change computing; Super data centers arise and bring cloud-based services and media to the masses; Broadband data explosion.
Jefferies believes that the number of cell sites in mature mobile data markets such as the United States is to double. Powerwave's remote radio head product enables them to put them in places they were not able to fit them before.
3G is a 2011 driver for Powerwave more so than 4G. While Powerwave's LTE/WiMAX revenues have been growing nicely and rose to 11% of total revenues in Q4:10, 4G is more of a 2012 driver for Powerwave than a 2011 driver. Powerwave is not an immediate beneficiary of Verizon's LTE build-out, but could benefit more from 4G as we get closer to 2012.
Jefferies expects Powerwave to gain traction in the government vertical and in in-building coverage solutions. But while both areas are positives, Jefferies does not expect a significant contribution from either in 2011.
Jefferies downgrades PWAV from Buy to Hold and raises the PT from $3 to $4
PWAV is trading lower at $3.66
