Please ensure Javascript is enabled for purposes of website accessibility

Why Ceragon Networks Shares Fell Today

By Anders Bylund – Updated Apr 25, 2019 at 4:29AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The wireless infrastructure specialist beat Wall Street's fourth-quarter targets, but not by a wide enough margin to support its soaring stock prices.

What happened

Shares of Ceragon Networks (CRNT 4.49%) fell as much as 16.5% on Wednesday, following the company's release of fourth-quarter results. The maker of ultrafast wireless networking technologies for service provider backhaul and other longer-range situations actually exceeded Wall Street's expectations for this quarter. But the surprise wasn't big enough to support a high-flying stock.

So what

Ceragon's fourth-quarter sales stopped at $85.7 million, 1.1% below the year-ago period's $86.7 million. On the bottom line, adjusted earnings rose 50% to $0.06 per diluted share. Your average analyst would have settled for earnings near $0.05 per share on sales in the neighborhood of $84 million.

Looking ahead, management said that revenues should rise in the 2019 fiscal year, although seasonal effects probably will drive first-quarter sales lower.

Digital rendering of a red charting arrow crashing down through the floor.

Image source: Getty Images.

Now what

The company is positioned to take advantage of the upcoming 5G wireless networking surge, by connecting wireless towers to the global internet through microwave radio links. But that's still a longer-term opportunity since service providers can't be expected to install their entire 5G solutions in a single year.

Some investors might have been hoping for a more rosy review of Ceragon's near-term prospects, and that caused them to take some profits off the table after viewing this report, which was good but not great. The stock was trading 86% higher year over year last night and is still soaring 57% higher on a 52-week basis today.

Check out the latest earnings call transcripts for companies we cover.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.