The firm set a price target of $27 for the company's stock. Northland Capital analysts say Aruba's ClearPass, ClientMatch, and Intsant products should help drive share gains and a growth rate.
"Aruba's gross margins have risen 400bps since 2009 despite competitive pricing, including heavy discounts / bundling from Cisco," the analysts wrote. "Aruba's new software modules ClearPass and ClientMatch should sustain margins - ClearPass is growing near 100%. Stable gross margins and rising revenue should drive operating margins to the high end of its 19-21% range. Aruba's stock compensation remains high, but improving."
TheStreet Ratings team rates ARUBA NETWORKS INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ARUBA NETWORKS INC (ARUN) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Communications Equipment industry. The net income has significantly decreased by 314.4% when compared to the same quarter one year ago, falling from $4.99 million to -$10.70 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Communications Equipment industry and the overall market, ARUBA NETWORKS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $33.36 million or 26.97% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 25.33%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 350.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- ARUBA NETWORKS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ARUBA NETWORKS INC reported poor results of -$0.29 versus -$0.09 in the prior year. This year, the market expects an improvement in earnings ($0.75 versus -$0.29).
- You can view the full analysis from the report here: ARUN Ratings Report