When Verizon reported the company’s second-quarter earnings, many analysts that cover telecom equipment makers raced to the data on what second-half capital expenditures (capex) were expected to be. A new report from Cowen notes that the giant carriers’ light first-half spending combined with unchanged total 2015 guidance could be big for the company’s communications equipment suppliers.
In the report, the Cowen team focused on stocks in the firm’s coverage universe that look to benefit from the second-half spending boost. They are careful to caution that the Verizon capex levels for the second half of the year are hardly top secret and are expected by most investors. With that in mind, three of the Cowen stocks are among the suppliers that derive the highest percentage of their total revenue from Verizon.
This company has been getting solid orders from a number of the big carriers. BroadSoft Inc. (NASDAQ: BSFT) is the leading provider of software and services that enable mobile, fixed-line and cable service providers to offer unified communications over their Internet protocol networks. The company’s core communications platform enables the delivery of a range of enterprise and consumer calling, messaging and collaboration communication services, including private branch exchanges, video calling, text messaging and converged mobile and fixed-line services.
The Cowen team sees what they have called in prior reports as “network transformation” projects driving near and longer term revenue ahead of the firm’s current and Wall Street forecasts, with eventual operating leverage perhaps starting next year. The company’s voice-over-Internet-protocol (VoIP) services have been in-demand at the carriers and should be able to drive Verizon orders.
The Cowen price target for the stock is $48 and the stock is rated Outperform. The Thomson/First Call consensus price target is $39.75. The stock closed Wednesday at $34.22.