Goldman Sachs Raises Brocade EPS Estimates On Ruckus Acquisition

Brocade Communications Systems, Inc. BRCD announced on May 27 that it had completed the acquisition of Ruckus Wireless Inc RKUS.

Analysts at Goldman Sachs maintain a Neutral rating on the company, while raising the price target from $9 to $10.

Impact Of Ruckus

The analysts expect EPS dilution of $0.06 during FY16, “as the company noted that it would be making incremental opex investments to be able to sell the Ruckus portfolio into its customer base.”

Related Link: Brocade Closed The Ruckus Acquisition; Now What?

However, the acquisition is estimated to be EPS accretive in FY17 by $0.14, as compared to the company’s target of $0.08–$0.12.

This accretion is likely to be driven by modes opex synergies, as well as the completion of share buyback worth $800 million in FY16.

The non-GAAP EPS estimates for FY16, FY17 and FY18 have been revised from $0.98 to $0.92, $0.99 to $1.13 and from $1.02 to $1.23, respectively.