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Wells Fargo Projects Sustained Growth For British Telecom Supplier Arris

Wells Fargo Projects Sustained Growth For British Telecom Supplier Arris
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Wells Fargo initiated coverage of ARRIS International plc (NASDAQ: ARRS) with above-consensus estimates for 2018, 2019 and 2020.

The Analyst

Wells Fargo's Aaron Rakers initiated Arris with an Outperform rating and $32 price target.

The Thesis

The British telecom equipment company is well-positioned to capitalize on ongoing upgrade investments in DOCSIS 3.1 technology, Rakers said in a Thursday note. (See the analyst's track record here.) 

Arris' weak first-quarter results should represent a bottom, the analyst said. Rakers said he's positive on the company's enterprise networking segment and sees it as a potential upside driver.

Wells Fargo forecast revenue for the enterprise networking segment to fall at the high end of Arris' $650 million-$700 million guidance range, and projects 13-percent CAGR from 2017-2021 and a sustained 60-percent-plus gross margin. 

Rakers named three drivers for Arris' enterprise networking segment:

  • The vertical expansion,  ramping and leveraging of the the Dell EMC original equipment manufacturer relationship.
  • The 802.11ax WLAN and campus switching upgrade cycle.
  • The U.S. Citizens Broadband Radio Services 3.5 GHz shared/dynamically licensed free spectrum represents a significant small cell opportunity.

The Price Action

Arris shares were up 1.77 percent at $26.44 at the close Thursday. 

Related Links: 

Benzinga's Top Upgrades, Downgrades For July 12, 2018

Goldman Sachs Updates Its Telecom Outlook: 'The Pipes Are Not Broken' 

Latest Ratings for ARRS

Jul 2018Wells FargoInitiates Coverage OnOutperform
Jun 2018Goldman SachsAssumesBuySell
Jan 2018Loop CapitalInitiates Coverage OnBuy

View More Analyst Ratings for ARRS
View the Latest Analyst Ratings

Posted-In: Aaron Rakers telecom Wells FargoAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga


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