Thursday, JMP Securities upgraded Novatel Wireless Inc. (NVTL) shares to Market Perform from Market Underperform. The brokerage maintained its 2009 EPS estimate of $0.32 and its 2010 estimate of $0.23.
Analyst Samuel Wilson upgraded the stock after the company achieved his downside price target on February 4. In February 4 morning trading, Novatel's stock traded at $7.00, the analyst's fair value for the stock. Based on this, the analyst sees the stock as fairly valued at these prices and believes it would trade generally in line with the market for higher risk small capitalization technology stocks.
The analyst is making no changes to his estimates, and he warn investors that this upgrade is not a particular indication that business trends have improved at Novatel, rather the company's true business prospects are now priced into the stock.
The analyst noted that longer term, Novatel needs to figure out how to transition its wireless technology from the cellular data PC market to other more stable endmarkets. 3G and 4G wireless data rates will be high enough to support a host of new applications that are more likely to provide Novatel with profitable and sustainable advantages. The analyst thinks that to continue to compete predominantly in the market for wireless modems is most likely a recipe for future financial losses.
Currently, NVTL is down $0.21 or 2.83% and trading at $7.21.
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