UPDATE: Brean Capital Initiates Coverage on Arris Enterprises Following Investor Day

In a report published Thursday, Brean Capital analyst Todd Mitchell initiated coverage on Arris Enterprises ARRS with a Buy rating and $26.00 price target. In the report, Brean Capital noted, “Poised to benefit from current spending trends and internal restructuring. We are initiating coverage on Arris with a Buy rating and a $26 price target. Arris held an investor day yesterday where it gave a positive report on its integration of the Motorola acquisition. Management reiterated its initial outlook for post-merger annualized revenue of $4.8-to-$5.1 billion and non-GAAP EPS of $2.00 to $2.15. Guidance is underpinned by a positive outlook for spending trends in its Video CPE and CMTS businesses, which together account for about 40%-to-45% of revenue, and larger than originally estimated cost savings from the Motorola integration. We see the potential for upside to guidance due to a history of solid execution and the potential for share gains in both businesses due to strong market positioning. Our price target of $26 is based on 12x our 2014E non-GAAP EPS of $2.15 and 10.5x our 2015E non-GAAP EPS of $2.45.” Arris Enterprises closed on Wednesday at $20.80.