Ubiquiti Networks' (UBNT) Outperform Rating Retained at FBN Securities Despite Fraud Loss

FBN Securities maintained an Outperform rating on Ubiquiti Networks (NASDAQ: UBNT) with a price target of $38. Comments follow Q4 results and guidance. Analyst Shebly Seyrafi noted disclosure that it was the victim of a business fraud was "unsettling" for investors, but he remains bullish on the stock.

"The company reported a FQ4/June revenue miss but EPS beat, and is guiding for FQ1/Sept. results to be below consensus of revenue but above consensus of EPS. The shares are expected to exhibit volatility today as the company disclosed that it was the victim of a business email fraud that resulted in a $39M loss, and it prior CAO Rohit Chakravarthy has announced his resignation. Coming on the heels of the departure of prior CFO Craig Foster, this event could be unsettling to investors. We believe that the hiring of Mark Spragg of FTI Consulting to do forensics will improve the company’s internal controls, though there could be other adverse discoveries as well. So uncertainty at the company has increased," said Seyrafi.

"The bull case on UBNT is based on ... Enterprise segment strength, with UniFi ac coming ... airMAX growth should accelerate by end of year ...Signs of stabilization in S. America (though some of the improved growth due to buying shifted from N. America) ... Valuation ... Stock repurchase plan."

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 $32.05 yesterday.

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