Riverbed Technology speeds network applications

Posted May 4th 2007 12:10PM by Larry Schutts
Filed under: Earnings Reports, Cisco Systems (CSCO), Hewlett-Packard (HPQ), EMC Corp (EMC), Technical Analysis, Juniper Networks (JNPR)

If you have ever had to deal with the slow response times of shared network software programs, you'll be able to appreciate the fact that there is a firm in San Francisco that can do something about it.

Riverbed Technology (NASDAQ: RVBD) provides hardware and associated software that speed the performance of shared computer network applications. The devices boost efficiency across wide area networks, routinely cutting business application times by factors of five and more. The company scales its systems to operate in environments ranging in size from small businesses to major data centers. Strategic partners include Hewlett-Packard (NYSE: HPQ) and EMC Corporation (NYSE: EMC). Cisco Systems (NASDAQ: CSCO) and Juniper Networks (NASDAQ: JNPR) are competitors.

The company pleased investors last week, when it reported Q1 EPS of twelve cents (ex-items) and revenues of $42.8 million. Analysts had been looking for five cents and $37.5 million. Management also guided Q2 EPS to 11-12 cents (six cent consensus) and Q2 revenues to $48-$49 million ($42.09M consensus).

The news popped the shares out of a mid-April "cup" into the late April "handle" of a Cup & Handle formation. The price is now showing signs of completing the pattern with a bullish rise from the right-hand side of the "handle".

Brokers recommend the issue with one "strong buy", three "buys", eight "holds" and two "sells". Analysts see a 40% average annual growth rate, through the next five years. The RVBD Sales Growth rate (212.41%) and EPS Growth rate (-0.28 to +0.12 yr/yr) compare favorably with industry, sector and S&P 500 averages.

Institutional investors hold about 18% of the outstanding shares. Over the past fifty-two weeks, the stock has traded between $13.60 and $36.25. A stop-loss of $27.90 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

Tags: fundamental analysis, FundamentalAnalysis, Riverbed Technology, RiverbedTechnology, RVBD, technical analysis, TechnicalAnalysis