Ceragon Networks Ltd.’s CRNT shares have witnessed a sharp decrease of 49.7% in the past three months, underperforming the Wireless-Non U.S. industry’s growth of 4% and Computer and Technology’s decline of 11.5%.
Price Performance
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The recent market volatility amid escalating trade tensions wiped out 8.2% since April 2 for CRNT stock. However, the stock was up 8.7% yesterday amid skyrocketing markets as President Trump announced a 90-day pause for reciprocal tariffs, barring China.
However, shares have been southbound since the company announced results on Feb. 11. While the company achieved record quarterly revenues in India, it highlighted a slowdown in the Communications Service Provider (“CSP”) business. CRNT’s commentary surrounding the increased forex volatility may have sparked investors’ concerns. Escalating trade tensions, especially with China, and a volatile macroeconomic backdrop remain additional concerns.
Let us discuss the stock’s pros and cons and explore whether this dip signals caution or opportunity for investors.
Frequent Product Launches to Drive CRNT’s Topline
Ceragon is making significant strides in capturing market share in high-growth areas such as millimeter-wave products and private networks. CRNT announced the launch of its latest innovative products, IP-100E, IP-50GP and EtherHaul 8020FX, at the Mobile World Congress 2025.
The newly introduced IP-100E is a cutting-edge, dual-carrier E-band solution powered by Ceragon's proprietary system-on-a-chip. This groundbreaking technology delivers an impressive 25 Gbps from a single unit and up to 40 Gbps in a 4+0 all-outdoor link, making it a game-changer in high-speed connectivity.
It is also focused on driving recurring revenues. In the last reported quarter, Ceragon secured $7 million in annual recurring revenues from managed services. This move toward managed services and software-based business models positions Ceragon for steady, ongoing revenue growth.
The company is diversifying its business into the private network business. It reported a 50% increase in bookings from private networks in 2024. CRNT’s recent acquisitions of Siklu and End 2 End Technologies, LLC are expected to boost the competitive edge in the private network business. End 2 End Technologies is a leading systems integration and software development company in the United States, while Siklu provides “multi-gigabit wireless fiber” connectivity in urban, suburban and rural areas of North America.
CRNT’s Exposure to India’s Market
Healthy demand for its solutions in India is a big plus. Revenues from India were $55.6 million, accounting for nearly half of the overall revenues in the fourth quarter of 2024. This growth reflects Ceragon's solid position in India’s telecommunications market, which is expanding rapidly as it upgrades to 4G and 5G infrastructure. Visibility in the region is improving as commercial terms for 2025 are being finalized with two major customers. Demand for high-capacity wireless products, particularly microwave and E-Band solutions, is expected to rise significantly in 2025 in India.
CRNT’s Strong Margin Performance
Improving top-line performance is positively impacting profitability. Non-GAAP gross profit increased 15.5% to $36.7 million on a year-over-year basis. Non-GAAP gross margin for the fourth quarter was 34.3% compared with 35.1% in the same period last year. Despite changes in the regional revenue mix, the company maintained gross margin by increasing revenues, continuously improving product costs and effectively managing fixed costs. Adjusted operating income for the quarter was $12.2 million, up from $7.8 million.
Management has provided revenue and operating margin guidance for 2025. It expects revenues between $390 million and $430 million, including contributions from the E2E acquisition. Non-GAAP operating margins are expected to be at least 10% at the lower end of this range, with improved free cash flow compared with 2024.
Plenty of Challenges for CRNT
Ceragon’s CSP business has been witnessing a slowdown over the past year. CRNT added that it was starting 2025 with low visibility and the potential recovery remains uncertain.
The company is facing a slowdown in certain public network domains outside of India, mainly due to a weak global macro environment. Moreover, it faces intense competition from Chinese players in Latin America, Africa and some parts of Asia-Pacific, leading to pressured revenues. Volatile foreign exchange fluctuations and the strengthening of the U.S. dollar versus several currencies are additional concerns.
Given the near-term headwinds, analysts have significantly revised their estimates downward for the current quarter and the current year.
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Conclusion: Hold CRNT for Now
Focus on growth initiatives, including mmW products, Private Networks and Managed Services, holds promise, but several challenges could put downward pressure on CRNT stock’s price. The slowdown of certain public network domains outside of India, the soft CSP market, and broader market uncertainty remain concerns.
It is prudent to wait for a favorable entry point at the moment, but investors already owning the stock can stay put, given the long-term growth potential.
CRNT carries a Zacks Rank #3 (Hold) at present.
Stocks to Consider
Some better-ranked stocks worth consideration with the broader industry space are BlackBerry Limited BB, Freshworks Inc. FRSH and Five9, Inc. FIVN. While BB sports a Zacks Rank #1 (Strong Buy), FRSH and FIVN presently hold a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BB’s fiscal 2026 EPS is pegged at 10 cents, up 3 cents in the past seven days. BlackBerry’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 93.75%. Its shares have gained 2.2% in the past year.
The Zacks Consensus Estimate for FRSH’s 2025 earnings is pegged at 52 cents per share, unchanged in the past seven days. FRSH earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 33.96%.
The Zacks Consensus Estimate for FIVN’s 2025 EPS is pegged at $2.61, unchanged in the past seven days. Five9’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 18.55%.
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