B.Riley analyst Dave King reiterated a Buy rating and $6.00 price target on Ribbon Communications (NASDAQ: RBBN).

The analyst comments "Although Ribbon Communications's (RBBN — Buy, $6 PT) 3Q/4Q results/outlook were mixed compared with consensus estimates, their key financial metrics, including revenue and profitability, are trending in the right direction. While other competitors except for Nokia (NOK) have yet to report their results, we believe it would be tough to top RBBN's robust performance, especially in the domestic market. Wednesday (10/23 AMC), RBBN reported 3Q revenue/ AEBITDA of $210M/$30M, compared to consensus of $212M/$26.9M. Book-to-bill was 1.2, compared with 1.1 in 2Q. While 1H was challenging, it appears 2H will be significantly stronger, with a nice tailwind heading into 2025. We believe the main catalysts are (1) a strong NA market, (2) the ramp of Neptune router business at AT&T (T), (3) stronger Verizon (VZ) C&E business, (4) recovery in India, (5) strong federal/defense, and (6) improving telecom spending environment, especially with rural broadband SPs. Although IP/Optical revenue declined 6% Y/Y, the domestic segment increased 124% Y/Y in 3Q. GM came in at 55.3%, compared with 54.4% in 2Q. AEBITDA increased to $29.9M from $21.7M in 2Q. The company guided 4Q revenue/AEBITDA outlook in the range of $235M-$255M/$46M-$52M, compared with consensus estimates of $250M/ $48.1M. The company also expects 2025 revenue to grow MSD. We raise our 2024 revenue/ AEBITDA estimates from $810.6M/$99.4M to $820.3M/$108.7M, and raise 2025 estimates from $847.4M/$122.9M to $857.2M/$127.2M. We maintain our PT of $6.00, which is based on an unchanged EV/sales multiple of 1.6x our 2025 revenue estimate, less net debt. Trading at only 1.0x/7.0x revenue/AEBITDA, we believe valuation remains attractive. We believe improving profitability and consistent execution by management will drive multiple expansion, and thus, we maintain Buy."

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Shares of Ribbon Communications closed at $3.43 yesterday.