Dougherty Discusses FCC E-Rate Funds Approval (ARUN) (CSCO) (HIVE) (RKUS)

Dougherty & Co reiterated a Buy Ruckus Wireless (NYSE: RKUS) with a price target of $18. Analyst Catharine Trebnick discussed FCC E-Rate funds approval, seen as a positive for Ruckus, Aruba Networks, Inc. (NASDAQ: ARUN), Cisco Systems (NASDAQ: CSCO), and Aerohive Networks (NYSE: HIVE).

"The Education vertical is one of the top five core vertical markets for Aruba. Our checks suggest the company has been shipping its AP 205, as of mid-June, into this vertical market. We estimate the Education/Public vertical contributes between 10-15% of total sales for Aruba. We believe revenue upside including E-Rate contribution can conservatively add 10% incremental revenue in 2015 (E-Rate drives revenues 2H 2015) and in 2016 E-Rate drives 12% incremental revenue growth. Aruba was up 28% Y/Y in the past quarter compared to Cisco where sales declined 1.3% Y/Y," said Trebnick.

"Education and logistics are key verticals for RKUS, roughly 5-8% of total revenue. The company’s enterprise/carrier split in Q1 was 61%/39%. We estimate in 2015 the E-Rate program can drive 5% incremental revenue and 8% in 2016 for RKUS. Our estimates for E-Rate contribution are included in the exhibit below," she added, "Cisco has roughly 50% of the total market share and some exposure in the K-12/public library vertical. However, the wireless vertical is less than 5% of total revenues for Cisco and any upside from E-Rate won’t drive meaningful revenue for Cisco. We believe the educational vertical is ~40-45% of total revenue for HIVE."

For an analyst ratings summary and ratings history on Ruckus Wireless click here. For more ratings news on Ruckus Wireless click here.

Shares of Ruckus Wireless closed at $11.88 yesterday.

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