Goldman Sachs Raises Brocade EPS Estimates On Ruckus Acquisition

Brocade Communications Systems, Inc. (NASDAQ: BRCD) announced on May 27 that it had completed the acquisition of Ruckus Wireless Inc (NYSE: RKUS).

Analysts at Goldman Sachs maintain a Neutral rating on the company, while raising the price target from $9 to $10.

Impact Of Ruckus

The analysts expect EPS dilution of $0.06 during FY16, “as the company noted that it would be making incremental opex investments to be able to sell the Ruckus portfolio into its customer base.”

Related Link: Brocade Closed The Ruckus Acquisition; Now What?

However, the acquisition is estimated to be EPS accretive in FY17 by $0.14, as compared to the company’s target of $0.08–$0.12.

This accretion is likely to be driven by modes opex synergies, as well as the completion of share buyback worth $800 million in FY16.

The non-GAAP EPS estimates for FY16, FY17 and FY18 have been revised from $0.98 to $0.92, $0.99 to $1.13 and from $1.02 to $1.23, respectively.