DragonWave poised to gain after AT&T deal
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DragonWave poised to gain after AT&T deal
SONALI VERMA
As AT&T Inc. prepares to face regulators over its proposal to buy T-Mobile USA from Deutsche Telekom AG, one company emerges as the clear winner from the transaction: DragonWave Inc.
The wireless equipment-maker is likely to gain as Sprint Nextel and Clearwire Corp. are forced closer together as a result of the acquisition, said Canaccord Genuity analyst Eyal Ofir.
“DragonWave would be a major beneficiary of any agreement between the two companies and a capital infusion into Clearwire enabling the company to continue its network build,” Mr. Ofir wrote in a research report.
Sprint and DragonWave are likely to resolve a pricing dispute within a few weeks, he said. “In our view, a resolution here would remove a major hurdle and would be the first step prior to increased support from Sprint and a potential cash infusion into Clearwire.”
Upside: Mr. Ofir has a $10 (U.S.) target price on DragonWave and rates it a “speculative buy.”