Shares of Sierra Wireless Inc. (NASDAQ:SWIR) were up 11.2% as of 3 p.m. EST Monday, after the Internet of Things pure play received an upgrade from Raymond James analyst Steven Li.
More specifically, Li increased his rating on Sierra Wireless stock to "outperform" from "market perform," assigning a price target of $30 per share -- a nearly 30% premium to its current trading price.
To justify his optimism, Li argued that the recent pullback in Sierra Wireless shares represents "an attractive entry point," especially as investors seem to be ignoring the company's recent design wins in the automotive space.
Both seem to be fair observations. On the former, Sierra Wireless had declined nearly 10% this month alone despite posting better-than-expected quarterly results on Nov. 2 -- a likely consequence of the stock's nearly 40% year-to-date rise leading up to that report. And on the latter, during last quarter's conference call, Sierra Wireless management noted that they expect material contributions starting in the second half of 2018 from several automotive programs, including a large deal with Volkswagen.
All told, Li believes internet-connected vehicle solutions could be worth as much as $3 per share and drive more than 5 percentage points of incremental organic growth for Sierra Wireless, which could in turn drive "upside surprises for a sustained period of time."
Of course, it'll take time and patience to see whether his prediction has merit. But I admire the long-term nature of this call. And I've long agreed that Sierra Wireless is one of the most promising Internet of Things plays on the market, in part thanks to its ambitious plans to penetrate the global automotive space.