Boingo Wireless Initiated At Sell By BTIG Research

BTIG’s Walter Piecyk expects Boingo Wireless Inc WIFI to deliver revenue and EBITDA growth, while returning to free cash flow, in 2017. However, the analyst believes the surge in the stock already reflects these factors.

Piecyk initiated coverage of the company with a Sell rating and price target of $6.85.

Risks

“Boingo’s legacy business of charging consumers for WiFi usage in high-usage venues like airports is in decline as a result of the proliferation of LTE data services and high-usage data buckets,” the analyst mentioned.

Although offering free WiFi paid for by advertisers has not proven effective for the company, the sustained growth in wireless data provides Boingo Wireless with a new growth avenue to offer LTE and WiFi roaming to wireless and cable operators that are looking to offload wireless data traffic in high-usage areas and extent their network reach.

Related Link: Boingo And Amazon Align To Deliver Fast, Free WiFi To Amazon Underground Customers

In addition, Piecyk pointed out, “Boingo has made acquisitions and capital investments to take advantage of these new opportunities and management believes it can leverage their large venue expertise.”

Concerns

Although the company has clear demand drivers, the analyst expressed concern regarding the terms to secure these deals, “whether it’s the cost to win an exclusive presence in a large venue or the pricing required to attract wireless and cable service providers onto those networks.”

Also, Piecyk believes technological development could alter the landscape for how and who will provide wireless capacity indoors.

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