Bernstein Initiates Coverage on 5 Data Networking Stocks - Update (CSCO) (FFIV) (JNPR) (RKUS) (ARUN)
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Price: $48.10 -0.52%
Rating Summary:
27 Buy, 29 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
Rating Summary:
27 Buy, 29 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
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Late on Monday, Bernstein initiated coverage on Data Networking stocks. Cisco (Nasdaq: CSCO), F5 (Nasdaq: FFIV), and Ubiquiti (Nasdaq: UBNT) were initiated at Outperform. Juniper (NYSE: JNPR) was given a Neural rating, and Aruba (Nasdaq: ARUN) and Ruckas (NYSE: RKUS) were slapped with Sell ratings. Analyst Pierre Ferragu thinks Aruba and Ruckas will be squeezed.
"Disruptive technologies (Cloud, Hyperscale and Software Defined Networking), increasing competitive pressure and slowing growth appear to be what most investors are concerned about. However, a fast pace of innovation and intense competition are not new to the industry — and that's why we believe competitive dynamics will remain largely unchanged, centred on platforms and innovation," said Ferragu.
"From that perspective, we believe Cisco has a strong and defensible right to make money. With dominant market shares in major segments, the company benefits from a pervasive installed base and the broadest industry portfolio, which are supported by a strong go-to-market organisation and a proven ability to 'manage-in' innovation . . . We see F5 as a strong platform as well, benefiting from SDN and structural growth in Layer 4-7 equipment. Ubiquiti is gaining traction with a unique and defensible late-entrant positioning, focused on the last pockets of growth in the market. In contrast, we see difficult times ahead for wireless-only players Aruba and Ruckus, likely to get squeezed between Cisco and Ubiquiti. Lastly, we see good value enhancement potential at Juniper, but recognise most of the trade is already behind us," he added.
"Disruptive technologies (Cloud, Hyperscale and Software Defined Networking), increasing competitive pressure and slowing growth appear to be what most investors are concerned about. However, a fast pace of innovation and intense competition are not new to the industry — and that's why we believe competitive dynamics will remain largely unchanged, centred on platforms and innovation," said Ferragu.
"From that perspective, we believe Cisco has a strong and defensible right to make money. With dominant market shares in major segments, the company benefits from a pervasive installed base and the broadest industry portfolio, which are supported by a strong go-to-market organisation and a proven ability to 'manage-in' innovation . . . We see F5 as a strong platform as well, benefiting from SDN and structural growth in Layer 4-7 equipment. Ubiquiti is gaining traction with a unique and defensible late-entrant positioning, focused on the last pockets of growth in the market. In contrast, we see difficult times ahead for wireless-only players Aruba and Ruckus, likely to get squeezed between Cisco and Ubiquiti. Lastly, we see good value enhancement potential at Juniper, but recognise most of the trade is already behind us," he added.
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