AVNW - Aviat Networks: Growth Outlook Disappoints But Too Cheap To Ignore Buy

2024-06-03 22:38:33 ET

Summary

• Aviat Networks reported mixed Q3/FY2024 results, with revenues falling slightly short but profitability well ahead of expectations.
• While margins were impacted by the recent Pasolink acquisition, favorable working capital movements resulted in strong cash flow generation.
• The company lowered growth expectations as Pasolink revenues won't ramp as quickly as previously anticipated. In addition, Aviat Networks is facing currency headwinds and a more cautious spending environment.
• On a more positive note, the Pasolink acquisition is reportedly ahead of plan from an EBITDA and free cash flow perspective and management continues to expect EPS accretion by Q2/FY2025.
• While the company's lower growth profile is somewhat disappointing, the issue is more than reflected in Aviat Networks' heavily discounted valuation. Consequently, I am reiterating my "Buy" rating on the shares with an unchanged price target of $50.

Note:

I have discussed Aviat Networks, Inc. ( AVNW ) previously, so investors should view this as an update to my earlier coverage of the company. ...

For further details see: