DWI Expect Further Near-Term Strength

admin — Tue, 24 Nov 2009 18:00:32 +0000

RBC CM is resuming coverage after $75MM treasury raise ($130MM total issue) and NASDAQ listing. RBC CM maintains OP, SR Rating. Target to $11 (from $10). RBC CM has been restricted from publishing on DragonWave for ~2 months – an eventful period for the company. During that time, DragonWave has: Reported FQ2/10 results significantly ahead of expectations; Increased F2010E revenue guidance to $150MM (from $120MM); Raised $75MM gross proceeds to the company in a NASDAQ listing; Issued a statement (October 27th) indicating that orders continue to grow, with backlog now 60% above levels indicated after FQ2; Seen their largest customer, Clearwire, secure an additional $1.6 billion in funding to extend the rollout of their WiMAX network. RBC CM expects continued strong financial results at least for the next several quarters, largely driven by the strong backlog of business to support the Clearwire rollout. For FQ3 (Nov) RBC CM expects sales of $46.7MM (+337% y/y), growing to $53.3MM in FQ4 (+370% y/y). In coming quarters RBC CM expects to see a) strong FQ3/FQ4 performance, b) new Clearwire milestones, c) Verizon’s selection of backhaul providers for its LTE network, d) AT&T’s selection of LTE infrastructure providers in 2010, and e) other contracts with service providers around the globe.

TSX Commentary » DragonWave Inc.

DWI Expect Further Near-Term Strength