3FQ21 Results: Stock Rebounds 12% After 23% Drop on Supply-Driven Negative Preannouncement



KEY POINTS
  • The company’s October 21 negative pre-announcement drove the stock from $35.76 down to $27.40, a 23% drop. Supply chain issues were the problem, and CEO Atul Bhatnagar expects supply chain issues to continue into calendar 2022. The company is changing some designs to make use of more common and/or more available components.
  • Without the supply constraints, the company said it would have beaten the high end of 3FQ21 guidance of $92 million. Demand for its products continues to be strong, and the company’s backlog was up 57% YoY entering 4FQ21. Revenue for the quarter of $75.9 million was above the $75 million indicated in the pre-announcement.
  • The company saw its Point-to-Multipoint (PMP) revenues fall 16% sequentially, but they are up 16% YoY. It continues to see strong momentum in network traffic. Its Point-to-Point (PTP) revenue was only down 1% sequentially. The most impacted segment was its enterprise Wi-Fi business, down 41% sequentially driven by a lack of chips. Bhatnagar said, “Demand remains very healthy for our enterprise business, but it remains a challenging environment to ship products.”
  • With supply chain issues continuing, guidance for 4FQ21 for $73.5-77.5 million in revenue is below consensus of $78.2 million. Non-GAAP EPS guidance is $0.11-0.17, below consensus of $0.20.
  • The stock is trading at a forward P/E of 24.9x, slightly above its two-year average of 24.3x. The stock has recovered 12% from the negative pre-announcement low of $27.40 per share.
  • Read our initiation and other reports on Cambium Networks on our website.
COMPANY OVERVIEW

Cambium Networks provides wireless broadband networking infrastructure solutions for network operators, including medium-sized wireless Internet service providers, enterprises, and government agencies. The company's scalable, reliable, and high-performance solutions create a purpose-built wireless fabric which connects people, places, and things across distances ranging from two meters to more than 100 kilometers, indoors and outdoors, using licensed and unlicensed spectrum, at attractive economics. Headquartered outside Chicago and with R&D centers in the US, UK, and India, the company sells through a range of distributors overseas.

The company’s October 21 negative preannouncement drove the stock from $35.76 down to $27.40, a 23% drop. Supply chain issues were the problem, and CEO Atul Bhatnagar expects supply chain issues to continue into calendar 2022. The company is changing some designs to make use of more common and/or more available components.

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