Rodman & Renshaw Resumes DragonWave (DRWI) at Buy
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Rodman & Renshaw resumed coverage on DragonWave (NASDAQ: DRWI) with a Buy rating and a price target of $4. Analyst Kevin Dede thinks its platform is under-appreciated.
"Nokia's purchase of Alcatel was contingent on the continuation of Alcatel's microwave radio development thus forcibly removing DragonWave from a bright position in serving Nokia's tier 1, global customer base. But we don't see all as lost, and instead choose to present DragonWave to investors in its new form as a company prepared to compete on multiple continents and one which meets multiple enduse microwave applications," said Dede.
The analyst added, "We see a glass half full for a number of factors detailed herein with the most relevant being: (1) DragonWave's product line (expanded under the auspices of meeting Nokia customer requirements); (2) a vast base of equipment deployed worldwide needing further support and service (building consistency and visibility in future cash flows); and (3) DragonWave's lost, but newly found, independent industry position (now, ex-Nokia) that equates to an open, global hunting license. Since the Nokia-related business fell off per the Alcatel deal, DragonWave was forced to adjust its selling process from indirect via Nokia to the new (but old) direct paradigm, sales levels were cut approximately in half, and Mr. Market has reflected a disappointing outlook."
Shares of DragonWave closed at $3.03 yesterday.
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