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Why Ceragon Networks Ltd. Stock Fell 11% in March

By Anders Bylund - Apr 10, 2017 at 7:24PM

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The maker of microwave-based networking equipment was due for a significant correction, and should expect more of those in the months and years to come.

What happened

Shares of Ceragon Networks (CRNT 6.51%) fell 11.1% in March 2017, according to data from S&P Global Market Intelligence.

So what

At the end of February, Ceragon shares had posted 234% of gains in the previous 52 weeks. The maker of microwave-based networking equipment had no significant news to share in March, and investors should count themselves lucky that the 11% correction wasn't sharper.

Wireless radio tower in sunset.

Image source: Getty Images.

Now what

Ceragon shares have made big gains in recent months, soaring 186% higher over the last year (including the March correction). On the other hand, long-term investors are still hurting from a five-year drop to the tune of 66%. You are watching the elastic bounce of an attempted turnaround, not an unfettered rise to untold heights.

In the upcoming age of gigabit-speed wireless connections for our smartphones, a handful of phones can exhaust the bandwidth available in one of Ceragon's backhaul connections. There will always be a place for microwave backhaul connections in places where it doesn't make economic sense to install fiber-optic connections to the internet backbone, but fiber is where it's at in most cases when 5G wireless services replace the 4G solutions we have today.

It's hard to make a case for owning Ceragon in this environment. I wouldn't be surprised to see most last year's gains fading away in the end.

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Ceragon Networks Ltd.
$1.80 (6.51%) $0.11

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