Needham & Company Maintains a 'Buy' on Riverbed Technology (RVBD) After Miss, But Lowering Numbers
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Price: $20.99 --0%
Rating Summary:
5 Buy, 27 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
5 Buy, 27 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Needham & Company maintains a 'Buy' on Riverbed Technology (NASDAQ: RVBD), PT lowered from $48 to $41.
Needham analyst says, "The JuneQ Riverbed results were a narrow miss, but had a severe impact (-23%) after-market, as shares were priced “to perfection” at roughly 7x EV/CY12 going into last night’s call. The RVBD miss apparently was localized to EMEA, where sales execution has been a problem and the head of sales was recently changed; on a positive note, US revenues were up 50%+ y/y. While it is difficult to generalize, we believe we have “seen this before” from Riverbed, specifically during its JuneQ09 miss, when many others in the group were performing well; that year, RVBD rebounded strongly off the miss. Our sense from field discussions is that demand for software is unchanged in EMEA, and we attribute this miss to “company specific” issues. The acquisitions of Zeus Technology (private, $110m cash, 15-16m revenue) and Aptimize (private, price N/A, “low single digits” revenue) are complementary as they offer capabilities in Application Delivery Control (ADC) and Web Content Optimization (WCO), and are EPS neutral then accretive in CY12. We don’t view these acquisitions as “buying revenue” as some might suspect; our view from the field is that WAN acceleration and data center refresh remain strong secular trends (e.g. US +50% y/y in JuneQ). To reflect in-line guidance for SeptQ, we are trimming estimates for CY11 and CY12."
For more ratings news on Riverbed Technology click here and for the rating history of Riverbed Technology click here.
Shares of Riverbed Technology closed at $41.40 yesterday.
Needham analyst says, "The JuneQ Riverbed results were a narrow miss, but had a severe impact (-23%) after-market, as shares were priced “to perfection” at roughly 7x EV/CY12 going into last night’s call. The RVBD miss apparently was localized to EMEA, where sales execution has been a problem and the head of sales was recently changed; on a positive note, US revenues were up 50%+ y/y. While it is difficult to generalize, we believe we have “seen this before” from Riverbed, specifically during its JuneQ09 miss, when many others in the group were performing well; that year, RVBD rebounded strongly off the miss. Our sense from field discussions is that demand for software is unchanged in EMEA, and we attribute this miss to “company specific” issues. The acquisitions of Zeus Technology (private, $110m cash, 15-16m revenue) and Aptimize (private, price N/A, “low single digits” revenue) are complementary as they offer capabilities in Application Delivery Control (ADC) and Web Content Optimization (WCO), and are EPS neutral then accretive in CY12. We don’t view these acquisitions as “buying revenue” as some might suspect; our view from the field is that WAN acceleration and data center refresh remain strong secular trends (e.g. US +50% y/y in JuneQ). To reflect in-line guidance for SeptQ, we are trimming estimates for CY11 and CY12."
For more ratings news on Riverbed Technology click here and for the rating history of Riverbed Technology click here.
Shares of Riverbed Technology closed at $41.40 yesterday.
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