Founder, BWS Financial Inc

Hamed Khorsand

Founder

Independent Stock Specific Research

BWS Financial Inc

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Equity Bottom-Up

<ul>
<li>NTGR held its annual investor day reflecting on the challenges it has incurred within retail and highlighting how consumer demand has remained strong for high-end devices and its 5G hotspot</li>
<li>NTGR’s stock has been trading at levels valuing the Company near its working capital on fears the business would continue to generate losses</li>
<li>NTGR’s transition in becoming a super-premium brand started over a year ago, but only in recent quarters has it began to take a bigger role on the consumer </li>
</ul>


NTGR held its annual investor day reflecting on the challenges it has incurred within retail and highlighting how consumer demand has remained strong for high-end devices and its 5G hotspot
NTGR’s stock has been trading at levels valuing the Company near its working capital on fears the business would continue to generate losses
NTGR’s transition in becoming a super-premium brand started over a year ago, but only in recent quarters has it began to take a bigger role on the consumer 


<ul>
<li>NTGR reported third quarter results showcasing continued growth in its SMB and service provider product lines while the retail channel remained challenged. </li>
<li>NTGR has been transitioning away from the lower end of the Wi-Fi router market, but a contracting market has extended out the timeframe of depleting channel inventory</li>
<li>NTGR’s growth driver are primarily its Pro AV switches and 5G hotspots, which continue to outperform our expectations</li>
</ul>


NTGR reported third quarter results showcasing continued growth in its SMB and service provider product lines while the retail channel remained challenged. 
NTGR has been transitioning away from the lower end of the Wi-Fi router market, but a contracting market has extended out the timeframe of depleting channel inventory
NTGR’s growth driver are primarily its Pro AV switches and 5G hotspots, which continue to outperform our expectations


<ul>
<li>NTGR is relying on the back-to-school shopping season to help sell through some of its lingering wireless router inventory as it transitions to higher end models</li>
<li>We continue to believe the retail market remains challenging for NTGR and the Company could have experienced difficulty in selling down inventory to desired levels</li>
<li>During the third quarter NTGR used Prime Day as an opportunity to reduce inventory for certain Nighthawk wireless routers. We expect the same again during Prime Day on October 11</li>
</ul>


NTGR is relying on the back-to-school shopping season to help sell through some of its lingering wireless router inventory as it transitions to higher end models
We continue to believe the retail market remains challenging for NTGR and the Company could have experienced difficulty in selling down inventory to desired levels
During the third quarter NTGR used Prime Day as an opportunity to reduce inventory for certain Nighthawk wireless routers. We expect the same again during Prime Day on October 11


<ul>
<li>NTGR is reaching the inflection point of rebalancing its channel inventory after deciding to transition away from lower priced wireless routers</li>
<li>Upgrading to Buy Rating from Neutral with inventory rebalancing near the end, strong SMB sales trends momentum, and growth within service provider</li>
<li>The higher sales performance from the SMB segment was not expected and should contribute to NTGR growing revenue in 2023 with upcoming release of WiFi 7 on deck</li>
</ul>


NTGR is reaching the inflection point of rebalancing its channel inventory after deciding to transition away from lower priced wireless routers
Upgrading to Buy Rating from Neutral with inventory rebalancing near the end, strong SMB sales trends momentum, and growth within service provider
The higher sales performance from the SMB segment was not expected and should contribute to NTGR growing revenue in 2023 with upcoming release of WiFi 7 on deck


<ul>
<li>NTGR spent the Q12022 reducing channel inventory of lower priced wireless routers, but there is still a lack of catalyst for consumers to upgrade after buying a router in 2020</li>
<li>NTGR's balance sheet makes the stock look attractive at current levels, but the first quarter has too many variables to push us off the sidelines</li>
<li>During the first quarter of 2022 it was visible the degree of discounting NTGR had undertaken in the channel to remove lower priced wireless routers, or sub $299 price point</li>
</ul>


NTGR spent the Q12022 reducing channel inventory of lower priced wireless routers, but there is still a lack of catalyst for consumers to upgrade after buying a router in 2020
NTGR's balance sheet makes the stock look attractive at current levels, but the first quarter has too many variables to push us off the sidelines
During the first quarter of 2022 it was visible the degree of discounting NTGR had undertaken in the channel to remove lower priced wireless routers, or sub $299 price point


United States

NETGEAR, Inc. provides networking products designed for small businesses and homes.  The Company's suite of products enables small businesses and homes to share Internet access, peripherals, digital content, and applications among multiple personal computers and other Internet-enabled devices.  NETGEAR markets and sells its products through distributors to a network of resellers.

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NTGR: Hotspot of a Preview

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We are moving back to a Buy Rating from Neutral with a price target of $30. The inventory rebalancing is coming to an end. Strong sales trends...

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NTGR: Discounting to a Router

We are lowering our estimates due to continued discounting in the first quarter for sub $299 wireless routers and handful of other routers above...

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