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Aruba Networks' Earlier Momentum Fades

Aruba recently announced an OEM agreement with Dell to deliver its secure mobility solutions to large enterprises, mid-market, healthcare, education and government markets under Dell's "PowerConnect W-Series Powered by Aruba Networks" brand.

Goldman Sachs has a buy rating for Aruba stock and maintains a 12-month price target of $20. Meanwhile, Needham maintains its buy rating for Aruba given its "continued growth trajectory," while raising its price target for the company to $20 from $16.

"We believe that Aruba's current business momentum will likely translate into additional upward estimate revisions," Needham analyst Greg Mesniaeff wrote in an investor note.

The company raised its guidance after announcing fourth-quarter earnings that beat the consensus estimate by a penny and higher-than-expected revenue amid the rapidly growing demand for wireless laptops, smart phones and other mobile device.

For the fourth quarter, Aruba Networks posted non-GAAP net income of $11.1 million, or 10 cents per share, compared with net income of $3.2 million, or 3 cents a share, in the year-ago period.

Revenue for the quarter was $77.3 million, an increase of 45% from the year-ago period.

The Wall Street consensus target for the quarter was 9 cents per share on revenue of $73.53 million.

Many analysts believe that Aruba will continue to grow at a faster rate than many of its networking peers, owing to the growing prevalence of wireless mobile devices in the government, healthcare and education sectors and the company's sharp focus on the wireless mobile space. Major competitors of Aruba include Cisco (CSCO - Get Report), Meru Networks (MERU - Get Report), Motorola (MOT) and HP (HPQ).

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-- Written by Andrea Tse in New York.



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