Boingo (WIFI) was founded by Sky Dalton on the premise that Wi-Fi "could help make the Internet as ubiquitous as the air we breathe." In the current climate, the entrepreneur might have phrased his intentions differently. Nonetheless, it was an idea that has proved prophetic, as wireless networks now form the fabric of the modern world.
The networking systems specialist has had a hard time in the market over the last twelve months and was struggling even before the coronavirus outbreak. WIFI shed 52.5% of its value in 2019, before dropping another 29% year-to-date. Boingo might be connecting devices but has lost the link between its stock and investors.
Further adding to the turmoil, Boingo’s recent earnings results missed both on top and bottom line. Revenue of $64.05 million missed the estimate by $5.69 million and decreased year-over-year by 5.5%. EPS of -$0.12 came below the Street’s call for -$0.11.
So, is it all doom and gloom for Boingo? Not according to Haron. The 5-star analyst recently reiterated an Outperform rating on Boingo along with raising the price target from $15 to $18. Should Horan’s thesis play out, investors could be taking home a very healthy 112% gain. (To watch Horan’s track record, click here)
Horan argues that the viral oubreak’s impact on Boingo’s operations is arguable. Even though traffic volume is down at airports and travel centers, where Boingo operates, over 95% of the company’s revenue is contractual. Horan does admit, though, that growth is likely to be impacted.
Between periods of Boingo stock dropping down like a hot rock over the last 12 months, the share price has experienced some upward movement on account of talks of a potential takeover. The company received multiple inquiries regarding a potential strategic transaction following Bloomberg News reporting that Boingo is exploring a potential sale.
Horan said, “The main focus is on the potential strategic transaction (breakup, takeover?), although Boingo reported weak results. We believe WIFI's neutral wireless infrastructure assets are unique and attractive to various bidders. Management remains focused on its core businesses: DAS, Military/Multifamily, and Wholesale. We continue to see Boingo as a potential takeover target with attractive neutral wireless infrastructure assets that will be utilized more once virus concerns subside.”
2 further Buy ratings from the analysts provide the network specialist with a Strong Buy consensus rating. The average price target is even higher than Horan’s and at $20, could potentially yield returns in the shape of 132% in the next twelve months. (See Boingo stock analysis on TipRanks)
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