Jefferies & Co. downgraded its rating on shares of Sierra Wireless Inc. (SWIR) to 'hold' from 'buy' as risk reward profit is now balanced. However, the brokerage raised its price target on shares of the Canadian mobile modem maker to $15 from $13.
We believe Sierra Wireless is well positioned to benefit from the move from 3G to 4G; however, we believe the risk reward profile is now balanced and are therefore downgrading to a Hold, said Peter Misek, an analyst at Jefferies.
Misek said Sierra Wireless share price exceeded his price target. Misek increased his price target due to a increase in its multiple to the high end of the historical range.
Misek still believes Sierra Wireless' machine-to-machine (M2M) opportunity is large and is likely secular in nature, but thinks that many of the benefits on the connectivity side from the 4G ramp are already priced into the stock.
There could be additional upside from embedded module ramps at PC original equipment manufacturers as well as from the imminent Vodafone (VOD) 4G dongle RFP (request for proposal). But, Huawei and ZTE have become even better at their fast follower strategy, which could limit upside. Overall, we now believe risk/reward is now balanced, said Misek.
Sierra Wireless is a communications equipment company delivering PC cards for portable computing, embedded vehicle mounts, machine to machine communications systems, original equipment manufacturer for embedded applications, telemetry modems and software tools and utilities.
Sierra Wireless shares closed Friday's regular trading up 2.33 percent at $14.92 on the NASDAQ stock market, while in after-hours the stock fell 0.28 percent to $14.88.