Airgain Catches Blowback From LeEco Controversy; Wunderlich Downgrades

Airgain Inc AIRG shares plunged more than 17 percent after Wunderlich downgraded the stock to Hold from Buy as prospects for continued demand from top customer LeEco became unclear with LeEco trading halted since last week.

LeEco's Influence

“[W]e require more clarity regarding LeEco in order to forecast growth sufficient for enough of a target increase to maintain a Buy rating,” analyst Matthew Robison wrote in a note.

However, Robison raised the price target to $19 from $18 on peer multiple expansion and despite dilution from last week’s follow-on offering.

The analyst expects continued expansion of ARRIS International plc ARRS business, especially with Comcast Corporation CMCSA and Liberty Global plc - Class A Ordinary Shares LBTYA and the expansion of the base business with DirecTV.

And Others

Among other customers, Robison expects solid growth contribution in 2017 from business directly or with suppliers to AVM, Belgacom, Sagemcom and Telefonica, along with prospects for incremental Time Warner Inc TWX and Charter Communications, Inc. CHTR's volume late in the year or in 2018.

“We view Airgain to be early in the evolution of home networking to wireless for content, increasing demand for bandwidth and coverage/range, which requires more antennas for denser multiple input multiple output (MIMO) protocols and more interfaces for home automation, which also require more antennas,” Robison continued.

Should LeEco shares begin trading again with better visibility for funding, the analyst expects to increase his revenue growth expectations toward 20 percent growth in 2017.

At last check, shares of Airgain had fallen 17.16 percent on the day to $15.16.