Goldman: Ruckus Wireless Is No Longer On Our Conviction Buy List

In a report published Monday, Goldman Sachs analysts have removed the shares of

from their Conviction List, following the results of the VARs survey conducted by Goldman Sachs in March. However, the analysts have maintained their Buy rating on the company. The price target has also been maintained at $16. Goldman Sachs had conducted a survey of 22 Value Added Resellers (VARs) based in the U.S. in late March 2015 with the aim of establishing enterprise networking trends and demand. The results of the survey show that VARs serving Ruckus' core market could witness some near-term risk in education-based demand, which could impact the company's performance in 1Q15 and 2Q15. According to the analysts, this soft patch could be "due to the pause ahead of E-rate ramping in 2H, as well as ahead of the 802.11ac Wave 2 product cycle." With Ruckus' shares having risen 25 percent over the past three months, Goldman Sachs believes it is unlikely that the shares have factored in the possibility of a near-term miss. "Despite removing Ruckus from the CL, we maintain our Buy rating, as over the intermediate- to long-term, we still see a positive risk reward, given the E-rate upgrade cycle starting in 2H15, the 802.11ac Wave 2 product cycle (with Ruckus product availability in 2Q15), and optionality in service provider WiFi with MVNO/cable operators and mobile operators," the analysts explained. The estimates have also been left unchanged.