Are You A Buyer Of Ooma Ahead Of Earnings?

• Ooma Inc OOMA shares are down 14 percent in the last three months, despite a 5 percent gain over the past 5 trading days.
• JMP Securities’ Patrick Walravens maintained a Market Outperform rating for the company, with a price target of $16.
• Although Ooma’s shares are down significantly, Walravens believes that the company’s fundamental business has remained unchanged.

Ooma is scheduled to report its F2Q16 results today, after market close. Analyst Patrick Walravens said that Ooma’s fundamental business has remained unchanged since the company’s IPO, at $13 per share, on July 17.

Ooma’s shares are down 30 percent since the IPO, as compared to a 9 percent decline in the NASDAQ composite index during the same period. The company’s shares are not trading at a 57 percent discount to the peer group median, the JMP Securities report stated.

“In our model, the company will turn consistently free cash flow positive in F4Q17 (January 2017) after having burned $17M of its $58M in pro-forma net cash,” Walravens wrote.

The non-GAAP EPS estimates for OOMA for FY16, FY17 and FY18 are $1.14, $0.28 and $0.10, respectively, versus the consensus expectations of $1.07, $0.25 and $0.11, respectively.