UPDATE: Jefferies Downgrades Riverbed Technology to Underperform On OPNET Acquisition

Jefferies reduced its rating on Riverbed Technology

from Hold to Underperform and lowered its price target from $20 to $16.25. Jefferies commented, "In light of the OPNET acquisition, we think the risk/reward in the shares is negative. Moreover, the deal reinforces our concerns that the WAN Optimization market is maturing – an ongoing structural negative for the business. … The deal seems rich in our view. At $43.00 share for OPNET, the company is paying roughly 30x calendar 2013 EPS (base business, ex-cash, ex-interest income) for the business (35x including stock option compensation expense). On an EV / calendar 2013 sales basis, the business is valued at 4.0x. We note that other higher growth, higher margin businesses in the space such as Aruba, F5, Broadsoft, and Acme currently trade at aggregate average multiples of 18.4x and 3.4x, respectively." Riverbed Technology closed at $22.62 on Friday.