Needham & Company Starts Ruckus Wireless (RKUS) at Buy
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Price: $12.87 --0%
Rating Summary:
7 Buy, 16 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 6 | Down: 3 | New: 3
Rating Summary:
7 Buy, 16 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 6 | Down: 3 | New: 3
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Needham & Company initiates coverage on Ruckus Wireless (NYSE: RKUS) with a Buy rating and $21 price target, equivalent to 5.3x EV/C2014E Sales.
"Acknowledging the recent upward move in the shares has brought them close to our PT, we'd look for any near-term weakness to become more aggressive on the shares," the analyst comments.
The firm has a positive fundamental stance on Ruckus given:
1. A play on the high-growth service provider (SP) Wi-Fi market. "Surging traffic growth on their cellular networks and improvements in Wi-Fi technology are leading carriers to embrace Wi-Fi as a legitimate means of increasing the capacity of their networks. Ruckus is a leading player in the nascent service provider Wi-Fi market, which Infonetics forecasts to grow from $300 million in 2011 to $2.1 billion in 2015, at a CAGR of 63%. With service provider Wi-Fi accounting for ~30% of its revenue, Ruckus represents the purest publicly investable play on this high growth market."
2. Differentiated, patented technology provides a competitive edge;
3. High growth; eventual leverage. "We forecast 77% top line growth in 2012 and 40%+ CAGR from '12 to '14.
4. Valuation: not cheap but reflects growth potential. "At EV/C2014E sales multiple of ~4.8x and a 2014E P/E of ~65x, RKUS shares are not cheap. That said, given 6-8x multiples achieved by near-peer Aruba during its high growth phase, the 12x multiple paid by Cisco for Meraki, which had a similar growth profile, and multiples of lower growth infrastructure names, we think the shares can support a 5-6x EV/Out year
Sales multiple assuming strong execution."
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 $18.96 yesterday.
"Acknowledging the recent upward move in the shares has brought them close to our PT, we'd look for any near-term weakness to become more aggressive on the shares," the analyst comments.
The firm has a positive fundamental stance on Ruckus given:
1. A play on the high-growth service provider (SP) Wi-Fi market. "Surging traffic growth on their cellular networks and improvements in Wi-Fi technology are leading carriers to embrace Wi-Fi as a legitimate means of increasing the capacity of their networks. Ruckus is a leading player in the nascent service provider Wi-Fi market, which Infonetics forecasts to grow from $300 million in 2011 to $2.1 billion in 2015, at a CAGR of 63%. With service provider Wi-Fi accounting for ~30% of its revenue, Ruckus represents the purest publicly investable play on this high growth market."
2. Differentiated, patented technology provides a competitive edge;
3. High growth; eventual leverage. "We forecast 77% top line growth in 2012 and 40%+ CAGR from '12 to '14.
4. Valuation: not cheap but reflects growth potential. "At EV/C2014E sales multiple of ~4.8x and a 2014E P/E of ~65x, RKUS shares are not cheap. That said, given 6-8x multiples achieved by near-peer Aruba during its high growth phase, the 12x multiple paid by Cisco for Meraki, which had a similar growth profile, and multiples of lower growth infrastructure names, we think the shares can support a 5-6x EV/Out year
Sales multiple assuming strong execution."
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 $18.96 yesterday.
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