Sierra Wireless is at the heart of tech’s biggest secular trend, says Cormark

Sierra Wireless (TSX:SW, Nasdaq:SWIR) is already an important player in the Machine-to-Machine (M2M) and Internet of Things space, which is biggest secular trend in tech today, says Cormark analyst Richard Tse.

Yesterday, Sierra Wireless reported its fourth quarter and fiscal 2014 results. In the fourth quarter, The company lost $1.7-million on revenue of $149.0-million, up 25.7% over last year’s $118.6-million in the fourth quarter topline.

“In the fourth quarter of 2014, we delivered record revenue and a strong year-over-year improvement in our key profitability metrics,” said CEO Jason Cohenour. “Going forward, we will continue to focus on delivering profitable organic growth, while bolstering our leadership position in the Internet of things with strategic acquisitions that expand our position in the value chain and enhance our business model.”

Tse says the quarter exceeded his expectations both for revenue and for non-GAAP EPS, but that the company’s guidance on non-GAAP EPS for the first quarter of fiscal 2015 of $0.15-0.18 fell below his former estimate of $0.24 and the street consensus of $0.20. The analyst, however, sees this shortfall as less important than other takeaways he says provide more visibility on where the company is going, long term.

“In our view, the important takeaway from the quarter was accelerating design win momentum. Even more important, that record pace in design wins suggests Sierra Wireless is gaining share against competitors,” said Tse.

The analyst thinks Sierra Wireless is one of the best positioned names in the M2M/IoT market. He cites a report from Infonetics that says The M2M module market alone is expected to double in value to $2.9-bilion by 2018.

In a research update to clients this morning, Tse reiterated his “Buy” rating and (U.S.) $50.00 one-year target on Sierra Wireless.