RKUS – Ruckus Wireless Stock Price: Ruckus Wireless (RKUS), a startup in the field of wireless networking that went public on November 16th, has had its share price drop by 75 cents, or 4 percent, to $18.21 after its underwriters today got the gags removed from their reports and wrote up their perspectives on the stock.
Morgan Stanley, Oppenheimer & Co., Craig-Hallum, Needham & Co., and William Blair all have a Buy or the equivalent rating on the stock, while Goldman Sachs and Deutsche Bank begin with a Neutral and Hold rating, respectively. The majority of the views are positive.
All of the notes emphasize that the opportunity for Ruckus is to sell public WiFi equipment to carriers who need to offload surging mobile data traffic from their precious cellular spectrum onto hotspots. This is the opportunity that is emphasized, and it is what is emphasized throughout all of the notes. However, in addition to selling to consumers, the company also sells to corporations for use in their internal networks. Ruckus is in direct competition with a number of other companies, including Cisco Systems (CSCO) and Aruba Networks (ARUN)
Some investors are of the opinion that the stock should pause for a moment given that it has increased by around 47 percent since the first-day closing price of $12.25.
RKUS – Ruckus Wireless Stock Price
The analyst at Needham & Company, Richard Valera, recommends purchasing the stock and has a price target of $21. “The ever-increasing volume of traffic that carriers are experiencing on their cellular networks, along with continuous advancements in Wi-Fi technology, is driving them to acknowledge Wi-Fi as a valid method for expanding the capacity of their networks.
Infonetics forecasts that the nascent service provider Wi-Fi market will grow from $300 million in 2011 to $2.1 billion in 2015, at a compound annual growth rate (CAGR) of 63 percent. Ruckus is a leading player in this market, which is expected to grow from $300 million in 2011 to $2.1 billion in 2015 “recent .”
In the words of Jason Ader and William Blair: The rating starts off at an Outperform. Instead of determining a pricing goal, Ader writes the following: “We do not necessarily argue for a multiple expansion from the current calendar 2013 EV/sales multiple of 5.5 times; however, we believe the stock is likely to be driven by upward revisions to revenue and earnings, which we believe will be significant given the growth trajectory of the carrier Wi-Fi market.
This is because we believe that the carrier Wi-Fi market will continue to be a lucrative market. Wi-Fi offload has evolved as a cost-effective method for reducing strains on crowded cellular networks. These networks have been flooded with traffic as a result of the phenomenal expansion of mobile devices and the introduction of new apps that require a significant amount of bandwidth.
Ruckus has established itself as a market leader, not just on the technological front but also in terms of its commercial deployments with tier-1 operators like KDDI (Japan), PCCW (Hong Kong), and O2 (United Kingdom) (United Kingdom). Based on the investigations that we have conducted inside the industry, we have reason to assume that practically every major mobile operator throughout the globe is either deploying or preparing to deploy Wi-Fi offload as part of its effort to expand its capacity.”
Goldman Sachs analyst Simona Jankowski recommends a “neutral” rating and a price objective of $20 for the stock.”
Principal engines of economic expansion Ruckus is a Wi-Fi vendor that focuses solely on that technology; around two-thirds of the company’s revenue comes from the $300 million SP Wi-Fi market (18 percent share). We anticipate that the market for enterprise wireless local area networks will expand at a compound annual growth rate of 19 percent from 2011 to 2015, driven by the transition to mobile devices such as smartphones, tablets, and notebooks.
RKUS – Ruckus Wireless Stock Price, Ruckus will continue to gain market share as a result of its superior RF performance and ease of deployment. We are much more positive about the SP Wi-Fi market, which we predict will increase at a CAGR of more than 58 percent through 2015. This is because Wi-Fi is expected to become a significant component of the heterogeneous network (HetNet) of the future, driven by its lower cost and the growth of mobile data.
The significant increase in the price of the shares since the market closed on November 16 (+55 percent versus S&P’s +4 percent), in our opinion, makes the risk/reward more balanced at present levels, with RKUS now trading at a CY13 EV/S multiple “to the power of 5.9.”