Business & Investment

Sierra Wireless (TSX: SW): Can I buy this 5G stock now?

If you believe that 5G is the future of the telecommunications industry, you need to make the following investments: Sierra wireless (TSX: SW)((NASDAQ: SWIR) 2021. Sierra Wireless is one of the world’s leading Internet of Things (IoT) solution providers. Helping simplify the IoT, its products and services include embedded routers and modules, connectivity services, managed solutions and applications.

Everyone has talked about the potential of the 5G industry and the upcoming boom in IoT stocks. But that hasn’t happened so far. This may change in 2021. 2021 could be the year of 5G and IoT, after many companies spend all of 2020 solely to protect their businesses from the COVID-19 pandemic.

5G enables many IoT devices to reach their full potential and add value to their customers.As a fellow fool Puja Tayar says“The 5G revolution will require everyone to upgrade routers, cellular modules and gateways, which will accelerate Sierra’s revenue growth.” Sierra expects to begin seeing 5G revenue in 2021. I will.

Why Sierra Wireless Stocks Need to Be Radar

Launched in the fourth quarter of 2020, Sierra’s 5G embedded module was almost immediately noticed by customers. T-mobile Authenticates one of Sierra’s 5G routers on your network.

Sierra’s share price soared in January in hopes of increased profits, but fell from $ 28.23 to $ 19.41 due to a global shortage of chips for devices.

Samuel Cochran, CFO of Sierra Wireless, said in a statement: “There was strong demand for our products and services in the first quarter, and hardware orders and recurring revenue were about 15% above the street consensus in the first quarter of 2009, but we are very tight. Faced with a global supply chain environment, it constrains its ability to procure components and fully meet this level of demand. “

In 2021, there was a ransomware attack on Sierra’s internal IT systems and corporate websites, and the company’s temporary suspension of production at several manufacturing sites didn’t help.

Sierra expects to miss the first-quarter guidance on revenues in excess of $ 110 million.

What’s next for investors?

Sierra’s finances are not something analysts like.It had Unforgettable 2020 And I was hit hard by the pandemic. Overall revenue in 2020 was down 18% to $ 448.6 million, but in the fourth quarter $ 120.48 million exceeded analysts’ expectations of $ 116.23 million. Sierra’s fourth-quarter net loss was $ 11.2 million, lower than the fourth-quarter 2019 loss of $ 15.3 million. The net loss in 2020 was $ 50 million.

However, it is not unreasonable to expect Sierra stocks to shine as 5G gains momentum as supply constraints on semiconductor chips are relaxed. A very important figure for Sierra in 2020 was US $ 140 million in long-term recurring revenue (LTARR).

The services business generated $ 46.3 million worth of LTARR contracts in the fourth quarter, up 40% from the third quarter. According to Sierra, LTARR means that customers are buying more services from the company after they buy their first product. This means that the cost of acquiring Sierra continues to fall.

There is little reason why Sierra stocks will not reach their January high of $ 28 again. This is a 50% increase from the current transaction price.

This article represents the opinion of a writer who may disagree with the “official” recommendation position of the Motley Fool Premium Services or Advisors. We are Motley! Asking investment treatises, even our own, can help you think critically about your investment and make decisions to be smarter, happier, and richer. As a result, we may publish articles that may not match recommendations, rankings, or other content.

David Gardner I own a stake in Sierra Wireless. Motley Fool recommends T-Mobile US. Aditya Raghunath does not have a position in any of the listed stocks.

Sierra Wireless (TSX: SW): Can I buy this 5G stock now? Sierra Wireless (TSX: SW): Can I buy this 5G stock now?

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