Netgear (NASDAQ:NTGR) shares surged 12% on Tuesday after the U.S. Federal Communications Commission announced a ban on imports of new models of consumer wireless routers manufactured overseas.
The restriction follows a determination by an inter-agency panel that some imported networking equipment could pose national security risks. Although the FCC said companies may seek exemptions, the decision has the potential to reshape the router market, which currently depends heavily on international manufacturing.
Stifel analyst Tore Svanberg, who maintains a buy rating on the stock, said Netgear is “well positioned” to adapt to the regulatory shift because the company does not produce its devices in China. “While NTGR’s current manufacturing locations are foreign, its status as a US-based firm with a transparent, non-adversarial supply chain makes conditional approval likely,” Svanberg added.
Raymond James analyst Adam Tindle, who rates the shares outperform, described the development as “incrementally positive” for Netgear. “We would caution against interpreting this as an outright ban on any one competitor such as TP-Link,” Tindle noted.
The regulatory move could give Netgear an advantage over router manufacturers based in regions considered security risks. Shares of several Asian router makers declined following the announcement of the new U.S. import restrictions.