Riverbed Technology Inc. Deal Seen Early In 2015

Riverbed Technology Inc.

recent results are a sideshow to the short-term story of a pending bid to acquire the company, an analyst said Friday. While fundamentals for Riverbed have deteriorated, "they haven't fallen off a cliff," Lake Street's Eric Martinuzzi said. "If any bid is serious, and this is obviously a big 'if,' we would expect negotiations in the January-February time frame," Matinuzzi said. Elliott Management Corp. earlier this month revived its rejected $21 a share offer to acquire Riverbed, which on Friday posted a 12 percent gain in adjusted income in line with expectations. Riverbed said recently it will "explore strategic alternatives." Martinuzzi rates the shares at Hold and said speculation about a sale is a dominant factor in how the company trades in coming months. Similarly, Morgan Stanley's James E. Faucette said speculation about Riverbed's response to the Elliott bid will "drive the stock price for the foreseeable future." Faucette rates the stock at Hold with a $20 target. Industry trends suggest a shift from wide-area networks supported by Riverbed to cloud-based computing. The trend "will limit any rebound" for Riverbed, in Faucette's view. Wunderlich's Matthew S. Robinson called the company's third-quarter results "familiar gruel," and maintained a Hold rating and $21 target. Robinson noted that both second and third-quarter results were preceded by profit warnings from Riverbed and that his price target matches the offer from Elliot. Riverbed closed Friday up 1.7 percent at $18.94 a share.