Sierra Wireless 'Ideally Positioned' For IoT Evolution, Roth Capital Says In Upgrade

After a 20-percent year-to-date retreat, Sierra Wireless, Inc. (USA) SWIR now have an attractive risk-reward profile, according to Roth Capital Partners. 

The Analyst

Analyst Scott Searle upgraded shares of Sierra Wireless from Neutral to Buy with a 12-month price target of $22.

The Thesis

Sierra Wireless, a supplier of cellular modules and gateways, is "ideally positioned" for the evolution of IoT, Searle said in a Tuesday note. The high performance, low cost and low power requirement of IoT-optimized LTE solutions is likely to lead to increased market adoption from an installed based of 300 million-plus devices to 1.2 billion-plus devices by 2020, the analyst said. 

Roth projects opportunities in enterprise, cloud and auto as well. Sierra's enterprise business is expected to add to growth, with contributions from FirstNet likely in late 2018 and 2019, Searle said. The Numerex deal has provided the company with scale in cloud and connectivity solutions, the analyst said.

Searle said he sees auto design wins with VOLKSWAGEN AG Sponsored ADR VLKAY and others contributing in the second half of 2018 and beyond.

Every $1 million in sales upside for Sierra translates to an incremental 1 cent in earnings per share, according to Roth Capital Partners.

The Price Action

Sierra Wireless shares were down about 47 percent over the past year through Monday. 

The stock was surging more than 10 percent midday Tuesday to $17.40. 

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