Wedbush Securities Reiterates Outperform Rating, $7 PT on ShoreTel

In a report published Wednesday, Wedbush Securities reiterated its Outperform rating and $7.00 price target on ShoreTel

. Wedbush noted, “We maintain our OUTPERFORM rating, given our belief that ShoreTel is well positioned in the UC market long-term despite challenges involving the integration of the M5 acquisition and the transition to a hybrid sales model. FQ4 results exceeded the high end of management's guidance and beat consensus expectations driven by large deals in the quarter and strong international performance. In its first full quarter, the hosted business (M5) surpassed expectations, delivering bookings growth in excess of 40% y/y and appears on track to deliver revenue growth of 20%+ in FY13. However, FQ1 guidance was in line with our estimates despite the FQ4 beat as management remains conservative on the spending environment. In the near-term, we expect upfront investments to scale the hosted business, but we expect leverage in the model to return in 2H of FY13 as the company rationalizes expenses and the business scales. In our view, the company is well positioned for growth longer-term and we believe investors looking to capitalize on the growth of UC cloud-based services should be exposed to ShoreTel.” ShoreTel closed on Tuesday at $4.37.