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Why Casa Systems Stock Soared More Than 50% Friday

By Anders Bylund - Feb 19, 2021 at 2:30PM

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The network infrastructure specialist posted analyst-stumping results in the fourth quarter.

What happened

Shares of Casa Systems (CASA 5.26%) surged as much as 54.3% higher on Friday, following a fantastic earnings report. By 1:40 p.m. EST, the network infrastructure expert's stock had cooled down somewhat to a 37% gain.

So what

In the fourth quarter of 2020, Casa Systems' revenue rose 7% year over year to $120.5 million. Adjusted earnings increased from $0.15 to $0.27 per diluted share. Your average Wall Street analyst would have settled for earnings of roughly $0.11 per share on sales near $107.5 million.

A yellow arrow smashes upward through a wall of blue bricks.

Image source: Getty Images.

Now what

The company booked 26 purchase orders for 4G and 5G wireless systems in the fourth quarter, making wireless products the largest revenue generator in this period at 42% of total sales. That's a significant shift from the year-ago quarter, where cable broadband equipment accounted for a leading 48% of Casa's total sales.

Wireless sales nearly doubled in fiscal year 2020, while fixed telco network sales posted even faster growth of 150%. The laggard in Casa's portfolio these days is the cable networking segment, which CEO Jerry Guo sees as a "steady and consistent" contributor rather than a growth driver.

It's no surprise to see Casa Systems' stock surging to 52-week highs on this impressive earnings report, though I can't say I saw a 50% earnings-based jump coming. Volatile small-cap stocks like Casa can deliver outsize market moves every now and then.

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Casa Systems, Inc. Stock Quote
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