Why Extreme Networks Shares Surged
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of networking gear maker Extreme Networks soared 19% today after its Q2 outlook blew out Wall Street expectations.
So what: Extreme's Q1 results -- adjusted EPS of $0.06 on revenue of $75.9 million -- just managed to squeak past the consensus, but a particularly upbeat view of Q2 is forcing analysts to boost their valuation estimates yet again. Specifically, Extreme expects its recently completed acquisition of Enterasys Networks to double its revenue and be immediately accretive to the bottom line, giving investors plenty of good vibes over the company's growth trajectory going forward.
Now what: Management now sees Q2 adjusted EPS of $0.14-$0.16 on revenue of $140 million-$155 million, well above Wall Street's view of $0.06 and $78.4 million. "Over the next 18 to 24 months, we will merge Extreme OS and Enterasys' EOS into a single operating system that will run seamlessly across our entire portfolio," said Extreme CEO Charles Berger in a conference call. "Although it will take a quarter or two to combine the customer and prospect databases, we now have a state-of-the-art lead generation, lead nurturing and sales force automation infrastructure." With Extreme shares now up a whopping 110% over its 52-week lows and trading at a 60-plus P/E, however, much of that integration optimism might already be baked into the valuation.
Interested in the next tech revolution?
Then you'll need to learn about the radical technology shift some say forced the mighty Bill Gates into a premature retirement. Meanwhile, early in-the-know investors are already getting filthy rich off of it... by quietly investing in the three companies that control its fortune-making future. You've likely heard of one of them, but you've probably never heard of the other two... to find out what they are, click here to watch this shocking video presentation!
The article Why Extreme Networks Shares Surged originally appeared on Fool.com.Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.