Arlo Technologies More Attractive On Its Own, Guggenheim Says - Arlo Technologies (NYSE:ARLO)

Following the pullback of Arlo Technologies Inc. ARLO, analysts from Guggenheim now recognize a 37-percent upside to its $26 price target. In just two days, analysts have become more confident in the company on its own.

The Analyst

Two days after starting coverage on the stock, Guggenheim analyst Robert Cihra upgraded Arlo from Neutral to Buy with a price target of $26.

The Thesis

Arlo has top market share in home security cameras, which inspires growth potential.

“Not only units but also new recurring subscription services that can leverage its >2mil user installed base, cloud connectivity+storage and AIbased services that start applying machine learning/computer vision to its millions of daily video streams,” Cihra said in a note.

Cihra anticipates the company's investment into ambitious user growth and AI subscription services to produce strong revenue drivers, following its spin-out from Netgear.

“As detailed in our initiating report, NTGR continues to own 84.2% of ARLO, with plans to distribute the remaining interest to its stockholders after a 145-day lock-up period for income tax purposes. Our initial NEUTRAL rating on ARLO came from its then-limited-upside to our $26 price target, and calculation that there was more upside from buying ARLO through its parent NTGR,” Cihra said.

However, Cihra is now aware of the upside to owning Arlo on its own, as opposed to the prior valuation earlier this week.

Price Action

Arlo shares were up 2.6 percent at $19.54 Thursday afternoon.

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