RBC Capital Remains Bullish on ARRIS Group (ARRS) After Meeting with Management
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RBC Capital reiterated an Outperform rating and $33.00 price target on ARRIS Group (NASDAQ: ARRS) after meeting with management and investors.
Analyst Mitch Steves commented, "We held investor meetings with Bob Puccini (VP of IR) and note the following key takeaways: 1) we think the line card upgrade is slated to impact Mar-qtr - gross margin accretive, 2) when the Company reaches $1B in cash (currently at $900M) they will look for M&A or buybacks, 3) COGs savings from Pace have been minimal at this point and will be seen in CY17, 4) while set-top boxes are lower than corporate operating margins we think some modems may be accretive (higher end new modems) and 5) we get the sense that investors would view an N&C transaction as a positive use of cash. Net Net: we came away incrementally positive on the Arris outlook and believe line cards, docsis 3.1 and capital allocation will be the key talking points over the next 6 months."
Shares of ARRIS Group closed at $28.90 yesterday.
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