Cisco Systems Inc.’s earnings beat and healthy guidance may signal a renewed spending cycle in the communications technology space, but its continued weakness in European revenues and orders doesn’t bode well for Aastra Technologies Ltd. The Concord, Ontario-based company generates about half of its revenues in Germany, France and the Nordic region, and close to 25% in other European countries.
Aastra is likely to report fourth quarter results on Feb. 16. National Bank Financial analyst Kris Thompson expects revenues or $220.9-million and earnings per share of 98¢, compared to consensus at $220.2-million and EPS of $1.01. However, he warned clients that Aastra’s top-line could miss.
The analyst is nonetheless keeping his forecasts unchanged since the fourth quarter is seasonally strong and there should be pent-up demand for Aastra’s solutions after two weak quarters.
“We don’t expect any negative surprises regarding profitability and cash flow generation, which is our key focus,” Mr. Thompson said.
Aastra shares are currently trading around $30. The analyst considers the stock cheap if the company executes and has a price target of $45. He also noted that it could generate annual cash EPS of $5.00
“In our opinion, the enterprise telephony market will continue to consolidate with Aastra eventually becoming either larger through M&A or acquired.”