UPDATE: D.A. Davidson & Co. Initiates Coverage on Procera Networks with Buy Rating, $19 PT as Acquisition of Vineyard Networks Creates Market Opportunity

In a report published Friday, D.A. Davidson & Co. analyst Mark Kelleher initiated coverage on Procera Networks PKT with a Buy rating and $19.00 price target. In the report, D.A. Davidson & Co. noted, “As data usage continues to strain mobile networks, network providers are turning to deep packet inspection (DPI) to better manage bandwidth. We estimate the total DPI market in 2013 at $600-$700 million, growing 20% annually, should reach a $1.4 billion market by 2017. The acquisition of Vineyard Networks in January 2013 expands the company's total addressable market to include the DPI enterprise market. Based on an OEM model, we believe the Vineyard products can contribute higher gross margins than the corporate average, with top-line growth also higher than the corporate average.” Procera Networks closed on Thursday at $13.49.