Why Towerstream Has 70% Upside

In a report published Tuesday, Rodman & Renshaw analyst Kevin Dede upgraded the rating on Towerstream Corporation TWER to Buy, while initiating a price target of $3. Analyst Kevin Dede said that the company's "revenue tide" could change in view of new contracts and the "potential depth of one." Towerstream reported its June quarter results broadly in-line with expectations from a "financial perspective." Dede pointed out, however, that the June quarter can be termed as "transformational," since the company delivered "a smattering of surprises" in business development. He added that new and unexpected business highlighted the attractiveness of the company's rooftop assets, while marking "what should amount to a change in direction over the near term." In the report Rodman & Renshaw noted, "Timing remains an issue as associated visibility is not entirely clear, but we see a more obvious path to cash generation than we have in the more than eight years we've known this company." The company's comments indicate that the trajectory of its new Verizon HetNet small cell contract was positive, while two new deals "clarify Towerstream's position and highlight the recognition the company now appears to be receiving," Dede said. The deals are with Syscom and an unnamed Internet of Things provider. The company's sales are expected to growth 14 percent to $36.4M in FY16, from the estimated $31.9M in FY15. Its EPS is expected to improve to ($0.51) next year, from ($0.53) in FY15.