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Ruckus Wireless (RKUS) Initiated As 'Hold' By Deutsche Bank, PT $20

 December 11, 2012 01:47 PM


(By Balachander) Ruckus Wireless Inc. (NYSE: RKUS) shares were initiated with a "Hold" rating and price target of $20 by Deutsche Bank analyst Brian Modoff.

Modoff said the proliferation of mobile and portable computing devices, as well as the overall steady growth of data consumption, has led to growing demand for wireless solutions within the enterprise and for additional small-cell capacity to augment existing service provider networks.

The analyst believes that Ruckus currently offers the best solution for addressing this demand in service provider networks and this contention is borne out in the accelerated growth of their sales in this vertical.

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"However, given their current valuation at 5.4X CY13E sales and the increased competition in the enterprise space, we initiate with a Hold," Modoff wrote in a note.

Modoff believes the company's offerings as well as their focus on the service provider market and scaled enterprise markets have enabled them to pull ahead of much of the field.

"We are positively biased towards their offerings and believe they can maintain this lead for some time, even as pricing for Access Points becomes more aggressive," the analyst said.

"Despite our positive outlook on the company's fundamentals, we think the market has priced in an aggressive growth ramp which makes the risk-toreward less appealing," Modoff said. "Even with their exposure to service provider spend, the company is still largely exposed to overall enterprise IT spending trends, which is still uncertain."

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The stock, which has been trading in the 52-week range of $12.25 to $19.73, lost 3.64 percent to trade at $18.27 on Tuesday.

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