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TheStreet Open House

Why Ubiquiti Networks (UBNT) Stock Is Soaring Today

NEW YORK (TheStreet) -- Ubiquiti Networks (UBNT) shares are up 7.7% to $34.01 on Tuesday after being upgraded to "strong buy" from "outperform" by analysts at Raymond James (RJF).

The firm set the company's price target at $50, suggesting a 52% increase from the stock's Tuesday opening price of $32.82.

Raymond James set this valuation believing that Ubiquiti is better positioned than its peers to bring low cost broadband Internet access to emerging markets.

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TheStreet Ratings team rates UBIQUITI NETWORKS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate UBIQUITI NETWORKS INC (UBNT) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • UBNT's very impressive revenue growth greatly exceeded the industry average of 3.5%. Since the same quarter one year prior, revenues leaped by 78.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although UBNT's debt-to-equity ratio of 0.26 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 5.03, which clearly demonstrates the ability to cover short-term cash needs.
  • UBIQUITI NETWORKS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, UBIQUITI NETWORKS INC reported lower earnings of $0.89 versus $1.12 in the prior year. This year, the market expects an improvement in earnings ($1.93 versus $0.89).
  • 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, UBIQUITI NETWORKS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: UBNT Ratings Report
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