ITN Stock Analysis
- CALX stock bounced higher off its 21-day exponential moving average
- Has an IBD relative strength rating of 95 and a composite rating of 98
- Has an accumulation/distribution rating of B+, indicating an institutional buy
Industry group ranking
* No real-time data. All data displayed was captured as of 2:04 PM EST on 11/18/2022.
Calix (CALX) is the IBD stock of the day as shares of the telecommunications network equipment maker bounce off their 21-day exponential moving average in solid volume. CALX stock is owned by industry group IBD Computer Networking, which ranks ninth out of 197 groups tracked by IBD.
Also in the computer networking group are Arista Networks (A NET), Cisco Systems (CSCO) and International Digi (DGII).
Calix is on the IBD Tech Leaders stock list along with Arista and Digi. Arista recently exceeded estimates with its third quarter earnings report. And Digi’s stock is gaining momentum thanks to the Industrial Internet of Things.
Trading today, CALX stock rose 6.6% to close at 69.82. Calix stock fell 13% in 2022, outperforming the S&P 500, down almost 17%.
CALX Stock: Fiber Networks Grow in Rural Areas
Calix’s biggest growth driver has been building fiber optic cabling for homes and businesses by AT&T (T), Lumen Technologies (LUMN) and Border (FYBR). In addition, federal government funding for broadband projects is expected to start. The funding aims to end the digital divide in rural America.
On Oct. 24, Calix reported earnings of 34 cents per share, down 3% from a year earlier but beating estimates of 23 cents. Revenue rose 37% to $236.3 million, beating estimates of $215.2 million.
The company expects earnings per share of 25 cents and revenue of $240 million in the fourth quarter, against estimates of 23 cents on revenue of $218 million.
Rooted in the sale of network access equipment, Calix restructured in 2017.
Stock Calix: Broadcom chip supplier
Calix moved all research and development to software. It now resells network access hardware made by other companies. Some Gear Uses Broadcom (AVGO).
New software offerings include “Calix Cloud,” an analytics platform that leverages network and subscriber experience data. Calix targets customer support, marketing and operations. Calix also sells fully managed services for broadband service providers.
“We believe Calix Cloud will drive a significant long-term uptick in EPS power and federal stimulus catalysts have yet to play,” Jefferies analyst George Notter said in a statement. Notter has a buy rating on CALX stock.
21-day exponential moving average
“Calix provides a very good overview of the overall FTTP (fiber to premises) market,” Notter said. “They have nearly 2,000 customers, 80-82% of which are Tier 2 or Tier 3 (smaller) service providers.”
From a technical standpoint, Calix stock rebounded off its 21-day exponential moving average. This chart line is an alternative to the 10 and 50 day moving averages.
Meanwhile, the relative strength rating for CALX stocks is 95 out of the best possible 99, according to IBD Stock Checkup. The best stocks tend to have an RS rating of 80 or higher.
The company holds a near-optimal IBD composite rating of 98 out of 99.
IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a composite rating of 90 or higher.
Calix Stock: Strong institutional ownership
CALX stock has an accumulation/distribution rating of B+, indicating institutional buying of stocks. The rating analyzes the price and volume changes of a stock over the last 13 weeks of trading.
Calix’s rivals include nokia (NOK) and Adtran (ADTN).
During the coronavirus pandemic, the Federal Communications Commission launched a new program called the Rural Digital Opportunity Fund (RDOF). This replaced the Connect America Fund. Initial funding for the RDOF was approximately $9.2 billion.
Additionally, the American Rescue Plan Act has provided funds to local governments to complete critical capital projects that directly enable work, including broadband.
CALX stock: private equity firms
Additionally, in 2021, the Biden administration and Congress passed a planned $67 billion in federal broadband subsidies. It was part of the Infrastructure and Jobs Act. It includes $42.5 billion for distribution to states through the Broadband Equity, Access and Deployment program and an additional $15 billion in the next phase of RDOF.
Most analysts don’t expect the bulk of federal funding to reach telecom companies until 2024 or later.
Meanwhile, telecom companies are expected to increase their own capital spending in rural areas. Private equity firms provided some funding. AT&T is believed to be in talks with private equity firms.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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