Alvarion Upgraded to Buy

We upgrade our rating to Buy for Alvarion Ltd (ALVR - Analyst Report), a pure-play wireless solutions provider. This follows a series of impressive contract awards to deploy several large-scale wireless systems. The value of one of these contracts was the largest ever attained by the company.

Alvarion has more than 250 WiMAX deployments in diversified geographic regions.  According to our assessment, higher bandwidth requirements and an increasing percentage of Alvarion’s overall business directed to WiMAX offerings are expected to drive revenue higher in future reporting periods. Furthermore, the company maintains a strong balance sheet and a respectable book-to-bill ratio.

The U.S. government stimulus plan for rural broadband expansion is providing further business prospects for Alvarion. On June 17, the company received a five year contract from Open Range Communications Inc, a U.S. wireless operator. The total contract size is estimated at more than $100 million. This is the single largest contract win in the company’s history.

Alvarion will provide radio access equipment, customer premises devices and systems integration for Open Range’s broadband wireless network deployment spanning 17 states and 546 rural communities reaching up to 6 million inhabitants. We believe successful implementation of this network may market Alvarion more favorably as the U.S. government instills a $7.2 billion stimulus plan to provide personalized broadband services in underserved locations of the country.