Telecom firm Verizon Communications, Inc. (NYSE: VZ) has awarded a multi-year purchase contract to infrastructure technology solutions provider Casa Systems, Inc. (NASDAQ: CASA). As part of the commercial agreement, Verizon will acquire a 9.9% stake in Casa Systems for nearly $40 million.
The contract requires Casa Systems to provide 5G core network functions to Verizon to power its public Mobile Edge Compute (MEC) service. The MEC technology helps a company take its computing resources onto cloud servers, closer to where data is generated.
The President and CEO of Casa Systems, Jerry Guo, said, “This announcement is an important milestone for our 5G Core and Security Gateway technology, as well as the growth potential of our business.”
Kyle Malady, the President of Global Networks and Technology at Verizon, said, “Casa Systems is an important member of our 5G and MEC ecosystem, providing flexible applications that will allow us to scale up for our customers as real-time solutions continue to grow.”
About Casa Systems
Massachusetts-based Casa Systems offers digital cable video and broadband services. Its products include cable, fixed, mobile, optical, and Wi-Fi networks; and casa access devices. Its servers are deployed in more than 70 countries.
Consensus Rating
Based on two Buys and one Hold, Casa Systems has a Moderate Buy consensus rating. CASA’s average price target of $7 implies 1.4% downside potential from current levels. Shares have gained 51.4% over the past three months.
Investor Opinions
TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on CASA, as 20.4% of investors on TipRanks increased their exposure to the stock over the past 30 days.
Conclusion
The news has come as a huge boost for CASA stock, which gained 82.5% on Monday to close at $7.10. However, the stock price corrected slightly and was trading nearly 9% down in the pre-market session on Tuesday.
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