Story updated at 9:55 a.m. to reflect market activity.
Aruba Networks fell -14.2% to $17.22 in morning trading.
The firm maintained a "neutral" rating for the stock. UBS analysts said the price target drop is driven by pressure on sales growth sustainability.
Separately, 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 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.
- 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 ($0.76 versus -$0.29).
- The gross profit margin for ARUBA NETWORKS INC is currently very high, coming in at 73.64%. Regardless of ARUN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ARUN's net profit margin of -6.06% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: ARUN Ratings Report