March 29, 2012 at 15:45 PM EDT
Aruba Analyst Day Reinforces Bull Optimism, Bearish Concerns
Shares of wireless equipment vendor Aruba Networks (ARUN) are down 20 cents, or 0.9%, at $22.27 following the company’s analyst day meeting yesterday. Apparently, both bulls and bears on the stock walked away with something to reinforce their respective points of view: Bullish! Brent Bracelin, Pacific Crest: Reiterates an Outperform rating on the shares and [...]

Shares of wireless equipment vendor Aruba Networks (ARUN) are down 20 cents, or 0.9%, at $22.27 following the company’s analyst day meeting yesterday.

Apparently, both bulls and bears on the stock walked away with something to reinforce their respective points of view:

Bullish!

Brent Bracelin, Pacific Crest: Reiterates an Outperform rating on the shares and a $30 price target. The focus, he writes, was on the “bring-your-own-device” to work phenomenon, and the challenges to IT of upgrading networks to handle increasing amounts of mobile, nomadic devices connecting to corporate resources. “New ClearPass software has material cross-selling upside potential. Customer presentations from Google and Brandeis University on requirements for new BYOD tools, coupled with new ClearPass wins at large Fortune 100 customers, validate the upside potential. Management believes that more than 50% of its large enterprise customers and an even higher number of managed service provider partners could embrace ClearPass, which implies that there is meaningful upside to both growth and margins over the next five years if this materializes.”

Erik Suppiger, JMP Securities: Reiterates a Market Outperform rating on the shares and a $30 price target. “Management reaffirmed that they expect revenues to accelerate once the transition away from the low-margin, hotspot business is complete. However, they tempered expectations for reacceleration as they are expanding into the large enterprise market in which sales cycles are longer than in other sectors. Once Aruba has worked through the noted issues, management believes growth rates will rebound to historical rates, which had been 35-45%. Notably, management doesn’t believe the company’s opportunity for growth slows until after Aruba reaches revenues of $1 billion annually. We were encouraged by management’s outlook given that Street estimates diverge and reflect decelerating growth from current levels.”

Bearish!

Shebly Seyrafi, FBN Securities: Reiterates a Sector Perform rating on the shares and a $24 price target, writing that there are “several growth drivers” ahead for the company, including the new “802.11ac” flavor of WiFi. “headwinds from its recent China pullback (which we believe hurt revenue by ~$2M last quarter) will persist for a few quarters before going away (perhaps by the April 2013 quarter). Moreover, ARUN is becoming more aggressive toward larger (“Cisco”) enterprise accounts, where sales cycles are ~6-12 months vs. 3-6 months for ARUN’s traditional customer base.”

Rajesh Ghai, ThinkEquity: Reiterates a Hold rating while cutting his price target to $24 from $26. “ARUN Management, in our view, did an effective job at articulating the company’s wireless access policy differentiation at the company’s Analyst Day yesterday. While our belief in ARUN’s security and access policy based differentiation is reinforced and we are encouraged by the raising of operating model targets, we retain our near-term concerns regarding the company’s decelerating growth resulting from a lengthening of Enterprise sales cycles and the exit from the China Service-provider business.”

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