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Hawk’s Nest

Call Option Buyer Scores Huge on Sierra Wireless Buyout

by | Aug 7, 2022

Sierra Wireless  (SWIR) shares have nearly doubled since being featured on OptionsHawk on 5/4 with September $17.50 calls jumping 125% form 7 /1 buys and the September $25 calls later bought on 6/8 up over 185%. The call spreads featured on 5/4 are good for a near triple.

On 5/4 we wrote:

Sierra Wireless (SWIR) with one of the more unusual large trade sin a small cap in a while as 5000 September $17.5/$22.50 call spreads opened for $1.30 ahead of 5-11 earnings. SWIR shares have traded higher five of the last six reports with an average max move of 13.5%. SWIR shares have performed well this year down just 6% YTD and the monthly forming a nice consolidation flag in the $14/$20 range. Sierra Wireless provides leading solutions for the Internet of Things with recurring connectivity services, cloud platform, routers and embedded cellular modules. Its Device-to-Cloud solutions reduce the complexity of IoT and allow customers to scale their deployments quickly and securely. With higher speeds, lower costs, increased battery life, and ubiquitous coverage in mobile networks, plus more ecosystem investment and innovative products from solution providers, the number of wireless connected devices and data traffic is expected to increase substantially over the next decade. This growth will be driven largely by deployment of LPWA and 5G technologies for both low-speed and high-speed IoT connectivity. In turn, this growth is expected to drive demand for secure, scalable, integrated device-to-cloud IoT solutions that can connect, gather, store, and manage data for customer applications. SWIR has a market cap of $640M and trades 28X Earnings, 1.35X Sales and just 8.35X cash with little debt. SWIR revenues are seen rising 24% in FY22 with SWIR also returning to profitability. Analysts have an average target of $21 and short interest is low at 2.4% of the float. Blair started shares Outperform recently noting SWIR is in the early stages of a turnaround with a new Board and management team. The new team has expertise in unlocking revenue growth, profitability potential, and ultimately shareholder value. Sierra’s portfolio of cellular modules, gateways, and routers, as well as its growing connectivity and solutions business, positions the company well to capitalize on Industry 4.0 trends.”