Suntrust Robinson Humphrey analyst Rodney Ratliff today raised his rating on shares of networking equipment firm Riverbed Technology to Buy from Neutral, with a $38 price target, arguing that the company’s 43% share of the “WAN optimization market” makes it a valuable purchase at a beaten-down stock multiple.
The shares trade for 22 times the $1.20 in EPS he’s modeling next year, above the consensus $1.15. Ratliff thinks that’s too cheap given the company’s 31% growth rate for earnings, and he thinks a more appropriate multiple is 32 times.
Worries about the company’s recent weakness in European sales are reflected in the shares, writes Ratfliff, while the recent appointment of a new head of sales for the region, Willem Hendrickx, who is “well-connected and well-liked by the customer base” could improve performance in that regard.
Riverbed’s acquisitions of privately held Aptimize and Zeus Technology should help the company improve its standing in the “cloud” computing market, he thinks. Zeus makes “virtual application delivery controllers,” which can increase the company’s share of application delivery controllers, and Aptimize enhances Web browser performance and ties into Riverbed’s deal with Akamai .
The shares trade for 22 times the $1.20 in EPS he’s modeling next year, above the consensus $1.15. Ratliff thinks that’s too cheap given the company’s 31% growth rate for earnings, and he thinks a more appropriate multiple is 32 times.
Worries about the company’s recent weakness in European sales are reflected in the shares, writes Ratfliff, while the recent appointment of a new head of sales for the region, Willem Hendrickx, who is “well-connected and well-liked by the customer base” could improve performance in that regard.
Riverbed’s acquisitions of privately held Aptimize and Zeus Technology should help the company improve its standing in the “cloud” computing market, he thinks. Zeus makes “virtual application delivery controllers,” which can increase the company’s share of application delivery controllers, and Aptimize enhances Web browser performance and ties into Riverbed’s deal with Akamai .
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