Per media reports, CommScope Holding Company, Inc. COMM and Google have obtained notification from the Institute for Telecommunication Sciences that their joint Environmental Sensing Capability (ESC) system has passed testing to support Citizens Broadband Radio Service (CBRS).
Notably, CBRS was established by the Federal Communications Commission to enable commercial users to share with the existing incumbents, including federal government radar systems. It provides 150 MHz of spectrum in the 3.5 GHz band in the United States. Though the CBRS spectrum is managed by Spectrum Access Systems (SASs), it will require an ESC network to detect federal radar operations.
CommScope’s ESC sensor has passed all testing from the lab and is on track for the next phase. The company looks forward to the initial commercial deployment, and working with customers and federal agencies. Presently, the shared network is being deployed and will likely be completed by the end of this year. CommScope and Google will each own and operate independent SAS systems which will provide services using the ESC network.
Furthermore, CommScope continues focusing on reducing its operational costs and optimizing the overall cost structure. The wireless and broadband network technology company boasts a track record of successfully executing annual profit-improvement plans and cost-saving initiatives. It has an agenda, which includes investment and reinvestment in the business through R&D, CapEx and M&A, reduction of debt and capital return to shareholders.
CommScope is focused on cutting-edge technology, highly efficient supply chain and its commitment to improve operations. This will likely make the company a preferred partner for telecommunications businesses as the industry moves toward 5G. It is dedicatedly developing solutions designed to support wireline and wireless network convergence, which will be essential for the success of 5G technologies. The company projects large North American telecom companies and cable operators to continue rolling out innovative solutions, in order to meet the rising demand for bandwidth. CommScope is specialized to support comprehensive solutions through its existing product lines, as well as ongoing developments.
In addition, with the enterprise market moving toward more cloud-based and hyperscale data centers, CommScope is actively in talks with various key customers. This augurs well for its long-term growth prospects. The company is also one of the leading suppliers of intelligent antenna platforms for FirstNet deployments. Moreover, the proposed acquisition of ARRIS will facilitate CommScope to benefit from rapidly-changing network and technology architectures with a unique set of complementary assets and capabilities to enable end-to-end communications. The combined entity is expected to create numerous cross-selling opportunities to expand into adjacent markets, offering potential revenue synergies.
For first-quarter 2019, CommScope expects revenues between $1.06 billion and $1.11 billion. For full-year 2019, the company anticipates revenues between $4.51 billion and $4.66 billion. Driven by the diligent execution of operational strategies alongside increasing market traction of coveted solution offerings, shares of CommScope have recorded average return of 31.8% compared with the industry’s rise of 29.1% over the past three months.
Currently, CommScope has a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader industry are Harris Corporation HRS, CenturyLink, Inc. CTL and Clearfield, Inc. CLFD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Harris has a long-term earnings growth expectation of 8%.
CenturyLink has a long-term earnings growth expectation of 5.3%.
Clearfield currently has a forward P/E (F1) of 47.8x.
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