UPDATE: Needham Initiates Coverage on Extreme Networks on Considerable Value From Acquisition of Enterasys

In a report published Tuesday, Needham & Company analyst Alex Henderson initiated coverage on

with a Buy rating and $9.00 price target. In the report, Needham & Company noted, “We are initiating coverage of Extreme Networks with a Buy rating and $9 target price. We believe Extreme Networks' acquisition of Enterasys Networks creates considerable value through streamlining, cross-product and cross-customer selling synergies, and through hard-nosed cost cutting. We think Extreme can reach a run-rate earnings level of $0.90-1.00/share over 12-18 months, even assuming virtually no top-line growth. Based on these conservative assessments, we think EXTR can reasonably be valued at 9.5x earnings. If the company can prove better growth rates, we believe it may be able to push the valuation higher.” Extreme Networks closed on Monday at $6.32.