Why are Sonus Networks, Inc. (SONS) Shares Up 27% Today?


As many of you probably noticed, shares of Sonus Networks, Inc. (NASDAQ:SONS) are trading much higher this afternoon. This comes after the company reported their fourth quarter 2015 and full year 2015 financial results, beating the estimates put forth by Wall Street analysts. The company reported diluted earnings per share of $0.23 for the quarter, surpassing analysts’ expectations of just $0.20 per share. Additionally, Sonus Networks, Inc. (NASDAQ:SONS) saw revenue for the quarter come in at $76.3 million, beating the Street’s expectations of $73.9 million.

This earnings beat has surprised many investors who have jumped at the opportunity to grab some shares, even at a premium. Guidance for 2016 was also announced with Sonus Networks, Inc. (NASDAQ:SONS) expecting to see $260 million in revenues on adjusted earnings per share of $0.24 in 2016. The guidance came in line with Wall Street’s expectations as well.

“We are pleased with the strong recovery we achieved in the second half of 2015, which brought our revenue back to levels comparable with the second half of 2014,” explained Ray Dolan, president and chief executive officer. “We had no 10% customers in the fourth quarter of 2015, although revenue from one of our historical 10% customers fell just short of this threshold. Instead, our fourth quarter revenue results were driven by a high volume of orders from a diverse set of customers. We are also very pleased with our cash and investments of approximately $142 million at the end of the year.”

The stock is up 27.14% or $1.45 following the news, hitting $6.77 per share. About 2.07 million shares traded hands or up 228.13% from the average. SONS has declined 16.98% since July 10, 2015 and is currently downtrending. It has underperformed the S&P500 by 6.78%.

From a total of 3 analysts covering Sonus Networks (NASDAQ:SONS) stock, 2 rate it a “Buy”, 0 a “Sell”, and 1 a “Hold”. This means that 67% of the ratings are positive. The highest target price is $10 while the lowest target price is $10. The mean of all analyst targets is $10 which is 47.71% above today’s ($6.77) stock price. Sonus Networks was the topic of 3 analyst reports since July 30, 2015 according to the firm StockzIntelligence Inc. Northland Capital upgraded shares on October 29 to a “Outperform” rating. Barrington Research upgraded SONS stock in a recent report from July 30 to a “Outperform” rating.

The institutional sentiment increased to 0.91 in Q2 2015. It’s up 0.13, from 0.78 in 2015Q2. The ratio is positive, as 12 funds sold all their Sonus Networks, Inc. shares they owned while 42 reduced their positions. 15 funds bought stakes while 34 increased their total positions. Institutions now own 31.73 million shares which is 8.79% less than the previous share count of 34.79 million in 2015Q2.

Empire Capital Management L.L.C. holds 8.76% of its total portfolio in Sonus Networks, Inc., equating to 2.14 million shares. Horrell Capital Management Inc. owns 831,500 shares representing 3.02% of their total US portfolio. Moreover, Harber Asset Management Llc has 1.05% of their total portfolio invested in the company, equating to 285,263 shares. The New York-based Central Securities Corp has a total of 0.9% of their portfolio invested in the stock. Walthausen & Co. Llc, a New York-based fund reported 1.55 million shares owned.

Sonus Networks, Inc. is a provider of networked solutions for telecommunications, wireless and cable service providers and enterprises. The company has a market cap of $338.96 million. The Company’s products include session border controllers, Session Initiation Protocol session management servers, Voice over IP (VoIP) switches, SIP application servers, multiprotocol signaling gateways and network analytics tools. It currently has negative earnings. The Company’s solutions address the need for communications service providers and enterprises to seamlessly link and leverage multivendor, multiprotocol communications systems and applications across their networks, around the world and in a changing ecosystem of internet Protocol (IP)-enabled devices, such as smartphones and tablets.