BMO Capital Upgrades Ubiquiti Networks (UBNT) to Market Perform

BMO Capital upgraded Ubiquiti Networks (NASDAQ: UBNT) from Underperform to Market Perform with a price target of $37.00 (from $30.00).

Analyst Tim Long commented, "Ubiquiti reported a solid quarter, with revenue of $167 million slightly topping expectations and EPS of $0.63 well above our/consensus $0.60/$0.57 estimates. Revenue and EPS guidance of $175 million and $0.63 at the midpoint was also well above consensus of $168M/$0.57, respectively. The quarter was driven by strength in enterprise segment sales, notably for the new 11ac access points. Enterprise sales grew a substantial 73% Y/Y and 36% Q/Q, and management is seeing evidence of success in penetrating some larger accounts, which would help increase the TAM. The success in the enterprise was almost entirely offset by weakness in the service provider segment, which missed our estimate by 12%. The inability to develop backwards compatibility continues to weigh on demand and the timeframe for a fix remains unclear. On margins, the execution remains impressive, in our view, with gross margins reaching an all-time high, helping to drive the EPS upside. Based on the better results, we are increasing our FY16 and FY17 revenue and EPS estimates to $657M/$2.36 and $714M/$2.57 from $651M/$2.30 and $700M/$2.43, respectively."

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

Shares of Ubiquiti Networks closed at $35.29 yesterday.

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