Shares of DragonWave Inc soared as much as 17 percent to a lifetime high, a day after the supplier of packet microwave radio systems posted quarterly results that topped market estimates and raised its fiscal 2010 revenue outlook.
For the second quarter ended Aug. 31, the company reported net income of C$6.3 million ($5.98 million), or 21 Canadian cents a share, compared with a loss of C$1.7 million, or 6 Canadian cents a share, last year.
Revenue climbed 236 percent to C$35.5 million, driven by key customer Clearwire Corp. Wireless service provider Clearwire accounted for 77 percent of the revenue.
Analysts had expected DragonWave to post earnings of 11 Canadian cents on revenue of C$32.71 million, according to Thomson Reuters I/B/E/S.
DragonWave, along with other vendors, is helping wireless service provider Clearwire build a nationwide network in the United States, based on WiMax technology.
Clearwire plans to spend about $3 billion to build the network, including the installation of about 20,000 cell sites. DragonWave will be connecting the backhauling of the cell sites to the nearest fibre-optic presence.
The company also said based on strength in the ongoing Clearwire business, together with stronger demand in other areas of its business, it now expects its revenue in fiscal 2010 to exceed C$150 million. Analysts expect revenue of C$123.17 million.
In September, DragonWave had expected its fiscal 2010 revenue to surpass C$120 million.
We continue to expect the company has a three-year potential to generate at least C$200 million of revenues with a 10 percent net income margin, analyst Kris Thompson at National Bank Financial wrote in a note to clients.
With about 30 million fully diluted shares outstanding, this stock could reach C$20 in a few years, he added.
Thompson, who has a outperform rating on the stock, raised his price target to C$14 from C$11.
DragonWave shares, which have more than doubled in the last three months, were up C$1.24 at C$10.48 in Friday afternoon trade on the Toronto Stock Exchange. They touched a high of C$10.80 earlier in the day.
(1=1.054 Canadian Dollar)
(Reporting by R. Manikandan in Bangalore; Editing by Maju Samuel)