Boingo Initiated With Outperform Rating, Oppenheimer Sets $12 Price Target

Oppenheimer believes that Boingo Wireless Inc

is well placed to take advantage of the data growth citing its radical transformation. Therefore, analysts Timothy Horan and Brajesh Mishra, reiterated their Outperform rating with a price objective of $12 on the stock implying more than 30 percent upside potentials. The brokerage predicts that mobile data traffic would record a growth rate of 10x in the next more than half a decade. Analysts are confident that the company could take advantage of it with the help of small cells combining both LTE and Wi-Fi roaming to cable and wireless operators. In a research note to clients, Oppenheimer said, "Boingo can be the low-cost provider of offloaded wireless data traffic in dense areas. We believe growth in data usage will necessitate a 25-50% increase in cell site equivalent locations, driving 20%- plus growth in small cell growth (Wi-Fi and LTE). Given the secular tailwinds, we believe that Boingo can grow revenue by 12% and EBITDA by 15% per year." The brokerage thinks that Boingo would also have the advantage of using LTE through unlicensed spectrum to leverage its current asset footprint to add incremental revenue streams. Another factor is that there is strong incentive for carriers to execute LTE-U. On the flip side, Boingo faces tough competition for venue rights and its capacity to grow cash flows depends largely on the expansion of venues across the region. The stock advanced $0.37, or 4.25 percent, to $9.07 at time of writing this.