Goldman Sachs' Weekly Commtech Performance Summary
In a report Monday, Goldman Sachs analyst Simona Jankowski summarized the weekly Commtech performance.
Goldman Sachs trimmed estimates for companies with significant exposure to the partial Federal government shutdown.
Companies with the highest exposure in this vertical include Brocade Communications Systems, Inc. (NASDAQ: BRCD), Polycom, Inc. (NASDAQ: PLCM), and Riverbed Technology, Inc. (NASDAQ: RVBD). Other companies in this category affected include Aruba Networks, Inc. (NASDAQ: ARUN), Infoblox, Inc. (NYSE: BLOX), Cisco Systems, Inc. (NASDAQ: CSCO), F9 Networks, Inc. (NASDAQ: FFIV), and Juniper Networks, Inc. (NASDAQ: JNPR).
Jankowski commented on the positive implications for BroadSoft, Inc. (NASDAQ: BSFT) and Cisco from the IP transformation.
The analyst wrote, "Last week, Deutsche Telekom hosted a webinar outlining its IP transformation initiative aimed at transitioning it to an all-IP network (termed “TeraStream”) over the next decade, including (1) shutting off the legacy PSTN (circuit-switched) network throughout DT's European properties by 2018, and (2) ultimately deploying all applications from cloud data centers, utilizing new technologies such as Software-Defined Networking (SDN), Content Delivery Networks (CDN), virtualization, and optical IP."
Goldman Sachs recommends to sell Brocade and Juniper Networks and remains neutral on Aruba, Gigamon, Inc. (NYSE: GIMO), Infoblox, and Riverbed.
The analyst raised the PT on Gigamon and Ciena Corporation (NASDAQ: CIEN) to align with the increase in peer multiples. Jankowski raised Gigamon's PT from $30 to $34 and Ciena's PT from $22 to $24.
Goldman Sachs further commented on Gigamon noting, "We view Infoblox as Gigamon's closest peer and we continue to believe it warrants a premium multiple (GS target EV/sales of 6.0X) to Gigamon as we believe (1) Infoblox's core DDI market is less competitive than Gigamon's network visibility market, (2) Infoblox is less exposed to the long-term threat of appliance model disaggregation due to software defined networking (Infoblox's database-like core products focus on control plane complexity rather than the data plane), and (3) Infoblox's expansion into network security allows it to address a much larger market opportunity than Gigamon's core network visibility fabric market."
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