Why NETGEAR Shares Popped
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What: Shares of networking equipment maker NETGEAR (NAS: NTGR) climbed 11% today after its quarterly results and outlook topped Wall Street estimates.
So what: NETGEAR shares have slid in recent months on worries over rising costs, but today's big first-quarter beat -- adjusted EPS of $0.73 versus the consensus of $0.68 -- suggests that those concerns are a tad overblown. Demand was particularly strong from service providers and in Asia, which is reigniting optimism over its long-term growth prospects as well.
Now what: Based on those tailwinds, management now sees second-quarter revenue of $315 million-$330 million, versus Wall Street's view of $320.3 million. "We expect to continue to benefit from the momentum on service provider demand in the second quarter 2012," Chairman and CEO Patrick Lo said. With the stock still down about 17% from its highs of just two months ago and trading at a forward P/E of 11, there might even be room to buy into that tailwind.
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