Here's why the Etherstack (ASX:ESK) share price is surging 11% today

The Etherstack PLC (ASX: ESK) share price is on the move today following two early morning announcements. We take a closer look at what the company announced.

| More on:
China war ASX shares iron ore price record asx share price rise represented by a rising arrow on green chart

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Etherstack PLC (ASX: ESK) share price is on the move today following two early morning announcements.

At the time of writing, the communications wireless technology company's shares are fetching for 55.5 cents, up 11%.

What's driving the Etherstack share price higher?

Investors are buying Etherstack shares after the company announced a follow-on order, as well as a positive trading update.

In its first release, Etherstack advised that its subsidiary, Auria Wireless has entered into a contract with communications provider, RCS Telecommunications.

Under the deal, Auria's P25 digital radio network technology will be supplied to an undisclosed major mining company. Auria stated that the iron ore customer is active in the Pilbara region of North-West Western Australia.

The contract is a follow-on order of an initial network deployment that was carried out last year to the client.

Etherstack expects the agreement to generate revenues of around $600,000, with most of the funds received in the current financial year. Once the contract is fulfilled, the company anticipates recurring support revenues will follow.

Etherstack CEO, David Deacon commented:

While the revenues from this win are modest, this is an important win for Etherstack in demonstrating the suitability of our products and technologies for this sector beyond our traditional public safety and electric utility markets. It is clear that the end client values Australian designed and manufactured solutions, as well as access to technical engineering expertise within the country.

Trading update

In further news boosting Etherstack shares, the company reported strong trading conditions for the first-half of the 2021 financial year.

For the period ending 31 December 2020, Etherstack highlighted a revenue uplift when compared against 2020 earnings. Key customer and development projects are on track, including the Australian Defence contract, and business development activities related to Samsung.

Management believes that further revenues may be achieved in the first-half from its network delivery and technology licensing deals.

Notwithstanding, Etherstack expects revenue for the H1 FY21 period to be in the range of US$3.1 million to US$3.6 million. This represents an increase of between 30% to 50% over the prior corresponding period.

Mr Deacon touched on Etherstack's outlook, adding:

The Company continues to deliver upon our business plan making significant progress in all major business units which will in turn drive long term growth and profitability for the Company and its shareholders. We expect FY2021 to continue to strengthen as new deals are closed.

The Etherstack share price has accelerated over 300% in the past 12 months, however, year-to-date performance is down 10%.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Technology Shares

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Five happy friends on their phones.
Share Market News

Goldman Sachs says these ASX tech stocks can rise 18% to 30%

The broker sees big returns on offer from these shares.

Read more »

A guy helps a girl lift a couch, both are laughing.
Technology Shares

3 of the best ASX tech shares to buy and hold until 2030

I think these stocks have exciting futures.

Read more »

A young woman uses a laptop and calculator while working from home.
Technology Shares

If I'd put $5,000 in Block shares 5 months ago, here's what I'd have now

Was it a good idea to invest in this payments stock five months ago?

Read more »

Close up of a sad young woman reading about declining share price on her phone.
Technology Shares

Why is the Brainchip share price sinking over 7% today?

What's going on with this tech stock on Wednesday?

Read more »

woman working on tablet
Technology Shares

Missed out on Nvidia? My best ASX tech stock to buy and hold

Do you have FOMO after the US chip maker's share price rocketed? Here's an Aussie company worth backing instead.

Read more »

Three businesspeople leap high with the CBD in the background.
Technology Shares

Guess which ASX small-cap stock is rocketing 45% on 'pivotal moment'

Investors have responded very positively to an announcement.

Read more »

A man looking at his laptop and thinking.
Technology Shares

Why are these ASX tech shares getting smashed today?

Owners of these two stocks are missing out today.

Read more »