Aruba Networks: Color on Quarter
- Oppenheimer notes Aruba delivered strong 4Q14 sales upside consistent with their positive checks and an outlook that suggests the momentum is sustainable well into FY15. The margin overhang is also clearing with mgmt. raising Aruba's FY15 operating margin target to 21.0-22.0% and proactively optimizing overall operations with a 4.0% headcount cut and 4.0% headcount relocation to lower cost facilities. They're raising estimates and continue to see room for upside driven by 802.11ac trends. And now that visibility into margin trends is getting clearer, they believe the shares will better reflect the strong top-line performance; Outperform.
- Mizuho raises their ARUN tgt to $21 from $20; Aruba still appears to be grabbing share and building volume in the 802.11 market. The co is now also taking concrete steps to improve two long-term investor concerns including 1) employee stock comp and 2) high op-ex. The combination should help consensus EPS to rise post report; they move to $1.05 from $1.00 for FY15
- Stifel raises their ARUN tgt to $26 from $24. As their checks showed, Aruba delivered a solid quarter with improved gross and operating margins. They continue to believe that being first to market with 11ac has helped Aruba consolidate its position in the market. This combined with partnerships with JNPR and HPQ should help the co continue to take market share against CSCO. Second, the SMB market is ripe for penetration and Aruba, with Instant, is in early days of expanding into that market; Buy.
- Robust Q4 tees up strength into FY15 - Northland; $27 tgt
- UBS upgraded ARUN to Buy from Neutral; tgt raised to $25 from $21