Shares of Israeli cellphone communications equipment manufacturer Ceragon Networks (CRNT) – Get Report dropped Wednesday after the company received a rare double downgrade from analysts at Needham.
The firm downgraded Ceragon to underperform from buy amid valuation concerns as the stock has shot up more than 120% year to date.
Ceragon shares were falling 11.2% to $5.74 per share in morning trading on Wednesday.
The stock jumped more than 30% on Tuesday and has more than doubled over the past three trading days, bringing the stock to its highest level since 2012.
That jump helped extend the company’s rally for a third session, with the ARK Israel Innovative Technology ETF (IZRL) recently adding the firm to its holdings, according to Bloomberg data.
Ceragon gained 33% on heavy volume on Tuesday as IZRL added 44,380 shares of Ceragon, bringing its total holdings to nearly 856,000 shares, according to Bloomberg.
Needham analyst Alex Henderson says the firm “cannot justify the current valuation,” and that even a buyout would be “unlikely to justify the recent move.”
Last week, Needham raised its price target on the company to $3.75 per share from $3.25 per share, leading to the spike. The company “had an upbeat tone on its outlook and position going into calendar year 2021,” Needham said in its note last week.
Ceragon recently announced that it will be releasing its fourth quarter results on Feb. 8 before the market opens. Analysts are expecting revenue of $72 million in a break even quarter.
Ceragon shares are up more than 75% over the past 12 months, with most of those gains occurring over the past five sessions.