Netgear (NTGR) stock surged on Tuesday after the Federal Communications Commission (FCC) announced a ban on the sale of new consumer router models that aren’t manufactured in the U.S. This ban was introduced due to the high percentage of routers in the U.S. made by China, which is estimated to be at least 60%.
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According to the FCC, there has been an increase in cyberattacks on U.S. consumers and small businesses since 2024. The agency argued that these attacks have occurred due to the security risks posed by routers made outside of the U.S. To be clear, routers that have already been approved by the FCC but are made outside of the U.S. are still eligible to be sold in the country, as it’s only new routers that must be made in the U.S.
This is interesting for Netgear due to its status as a U.S. networking company. Even though it designs its routers and other networking gear in the U.S., manufacturing takes place overseas, meaning its products are included in this router ban. However, the company could be granted a Conditional Approval by the Department of War (DoW) or the Department of Homeland Security (DHS) to sell select new routers in the U.S., even if they are made outside of it.
Netgear Stock Soars Today
Netgear stock was up 11.79% in premarket trading on Tuesday, following a 5.85% rally yesterday. However, the shares were still down 10.07% year-to-date and 11.05% over the past 12 months.
Today’s router ban news has likely attracted investors to NTGR stock as they expect reduced competition from foreign rivals in the U.S. router market. Investors could also be betting on the company’s potential to shift router manufacturing to the U.S., which could help it avoid the ban completely. Traders will also note that none of the major networking companies manufacture their consumer routers in the U.S.
Is Netgear Stock a Buy, Sell, or Hold?
Turning to Wall Street, only a single analyst has covered Netgear over the past three months. Five-star Stifel Nicolaus analyst Tore Svanberg rated the stock as Buy with a $36 price target, representing a potential 63.19% upside for the shares.
