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 cloud with a blue arrow pointing upwards through its middle symbolising a rising asx share price
Record Highs

Xero and 2 other ASX tech shares cracking all-time highs on Thursday

The price peaks follow a significant lift in the NASDAQ overnight following Republican Donald Trump's US election victory.

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Share Market News

Appen share price lifts 5% on oversubscribed SPP results

The technology company has announced the results of its Share Purchase Plan.

Read more »

Three small children reach up to hold a toy rocket high above their heads in a green field with a blue sky above them.
AI Stocks

Why is the BrainChip share price surging 17% today?

The stock has caught a strong bid today.

Read more »

a man dressed in a green superhero lycra outfit stands in a crouched pose with arms outstretched as if ready to spring into action with a blue sky and oil barrels lying in the background.
Technology Shares

The great Australian ASX Green Tech rally is starting now

The future could be bright – and green, experts say.

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Technology Shares

Why are WiseTech shares catching heat this time?

The news continues on for WiseTech.

Read more »

A man smiles as he holds bank notes in front of a laptop.
Technology Shares

ASX 200 tech stock lifts on $2.9 billion funding news

The ASX 200 tech stock is getting a boost from $2.9 billion in new funding arrangements.

Read more »

Five happy friends on their phones.
Technology Shares

2 exciting ASX tech shares to buy and hold for 10 years

Brokers believe these shares could be great options for growth investors.

Read more »

A view of competitors in a running event, some wearing number bibs, line up together on a starting line looking ahead as if to start a race.
Technology Shares

Here's how the ASX 200 market sectors stacked up last week

ASX technology shares led the market with a 2.48% increase last week.

Read more »