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Wells Fargo Downgrades Aruba Networks (ARUN) to Market Perform

May 17, 2013 7:08 AM EDT Send to a Friend
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Price: $17.86 -2.51%

Rating Summary:
    17 Buy, 16 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 26 | Down: 32 | New: 6
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Wells Fargo downgraded Aruba Networks (NASDAQ: ARUN) from Outperform to Market Perform and cut its price target from $20-22 to $13-15 following disappointing FQ3 results and FQ4 guidance, and now question Aruba's ability to drive materially better growth and profitability over the next few quarters.

Analyst Jess Lubert comments, "The crux of our concern stems from increased product bundling efforts by Cisco, which appeared to impact Aruba's ability to close a number of large deals in North America & Europe during the month of April. Cisco is now implementing these efforts in Europe & Asia, which may create additional challenges in the quarters ahead. In order to combat this concern, Aruba plans to add sales resources and invest to extend technology leadership. That said, these initiatives are likely to take time to bear fruit and may present a near-term overhang for margins. And with shares of Aruba trading at 21x our revised CY2014E EPS of $0.69, we think visibility to improved growth and profitability is needed for the stock to work from current levels, which may not become apparent for several quarters."

The firm cut FY2013 and F2014E EPS estimates from $0.67 & $0.75 to $0.63 & $0.61.

For an analyst ratings summary and ratings history on Aruba Networks click here. For more ratings news on Aruba Networks click here.

Shares of Aruba Networks closed at $17.61 yesterday.




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