Analysis Optimistic for Ruckus Wireless

Wireless service provider Ruckus Incorporated (NYSE: RKUS) is expected to experience significant growth in the next few years, according to analyses published today by Deutsche Bank, Oppenheimer & Co., and Morgan Stanley.The consensus among the reports is built on a foundational principle that requires little explanation: wireless networking is the wave of the future, and companies that have access to that market have potential to aggressively gain market share and enjoy consistent growth over the course of the next few years.“Companies of every size are using mobile applications to increase productivity,” says a report from Deutsche Bank, and Ruckus has positioned itself well to take advantage of increasing demand for WLAN services.Ruckus benefits from vertical integration of its WiFi infrastructure equipment, with access points, network controllers, software tools, and gateway equipment all under its umbrella. The reports consistently raise the issue of Ruckus' involvement with mobile data offloading on devices such as tablets and smartphones, as well as its emphasis on capacity improvements and dealing with the problem of network interference. The positive analyses point to Ruckus as being at the forefront of novel efforts to expand into these areas.Price targets by the three research firms were all strong relative to Ruckus' close yesterday of $18.96 per share. Specifically, the price targets estimated for Ruckus range from $20 per share from Deutsche bank, $22 per share projected by Morgan Stanley, and $23 per share by Oppenheimer. The latter pointed out that Ruckus' sales tripled from 2010 to 2011, and then doubled in 2012 to approximately $64 million. The Oppenheimer report continued by adding that they expect the entire WLAN industry to grow by a factor of 15.8 percent over the course of the next four years, with Ruckus likely taking a lead in the market due to its sales model, and emphasis on multiple areas of the wireless market.In its decidedly more conservative price target of $20, Deutsche Bank maintained that the service provider's interest in capacity gains and interference mitigation is what will set it apart from competitors and allow its revenues to continue to grow over the next few years.Of course the market research carries some caveats as well. The biggest issue mentioned by the three reports included heavy market competition from larger firms, such as industry giant Cisco Systems Inc. (Nasdaq: CSCO), with Deutsche Bank pointing out that a company of that size could cut prices in an attempt to edge out smaller competitors.Another important factor that could cause Ruckus' guidance to change is the general uncertainty in a technology market that is rapidly evolving and subject to changes in product standards. Additionally, changes in technological trends could have a potentially negative and as-yet unforeseeable impact on the market.