Analysts Offer Insights on Technology Companies: Rubicon Project (NYSE: RUBI) and Arista Networks (NYSE: ANET)

By Ryan Adsit

Analysts have been eager to weigh in on the Technology sector with new ratings on Rubicon Project (NYSE: RUBI) and Arista Networks (NYSE: ANET).

Rubicon Project (NYSE: RUBI)

In a report released today, Youssef Squali from Cantor Fitzgerald reiterated a Hold rating on Rubicon Project (NYSE: RUBI), with a price target of $6.50. The company’s shares opened today at $6.70, close to its 52-week low of $6.12.

Squali noted:

“4Q16 results beat very low hurdle. RUBI reported non-GAAP net revenue of $66.9M (-20.1% Y/Y), 4.5% above FactSet consensus of $64.0M, reflecting continued challenges in desktop display/header bidding, and in the context of a low hurdle to clear. EBITDA of $21.6M (32.2% margin) and adjusted EPS of $0.37 were 42%/148% above respective consensus estimates of $15.2M/$0.15. Advertising spend declines due to further deterioration in desktop and mobile web. Advertising spend decreased 18% Y/Y to $277.1M (-11% ex. static and intent marketing solutions), primarily due to a 23% decline in desktop spend (64% of total spend) and a 5% reduction in mobile spend (primarily driven by mobile web). However, this was slightly better than our $263.5M estimate. Management will no longer provide ad spend details for Orders vs. RTB. Disappointing 1Q17 guidance reflects a continuation of these trends. Due to continued deterioration in desktop display and legacy mobile web, management’s 1Q17 guidance came in well-below the Street. For 1Q17, management guided to net revenue of $41-44M (vs. cons. $54.0M), adj EBITDA of ($6-4M) (vs. cons. $9.6M), and adj EPS of ($0.26-0.22) (vs. cons. $0.09).”

According to TipRanks.com, Squali is a top 100 analyst with an average return of 12.3% and a 69.3% success rate. Squali covers the Technology sector, focusing on stocks such as TripAdvisor Inc, Leaf Group Ltd, and Microsoft Corp.

Currently, the analyst consensus on Rubicon Project is Hold and the average price target is $8.67, representing a 29.4% upside.

In a report released today, B. Riley also downgraded the stock to Hold with a $7.50 price target.
Arista Networks (NYSE: ANET)

Oppenheimer analyst Ittai Kidron reiterated a Buy rating on Arista Networks (NYSE: ANET) today and set a price target of $142. The company’s shares opened today at $128, equals to its 52-week high of $128.

Kidron said:

“We hosted meetings with Arista CFO Ita Brennan and come away with increased confidence regarding Arista’s opportunity with cloud providers (not just Microsoft) and the minimal LT impact of the litigation with Cisco. We see multiple growth drivers still in early innings, including (1) growing opportunities with cloud providers beyond Microsoft, reflecting our belief that cloud providers are more open to leveraging vendors that bring value through software (such as cEOS); (2) emerging DCI routing; (3) HPE go-to-market partnership; and (4) potential incremental US Federal business. We remain confident Arista will overcome upcoming legal hurdles with minimal disruption. We’re increasing our price target to $142 from $120 given our increasing conviction in Arista’s opportunities. Estimates unchanged.”

According to TipRanks.com, Kidron is a 3-star analyst with an average return of 1.6% and a 53.8% success rate. Kidron covers the Technology sector, focusing on stocks such as Hewlett Packard Enterprise, Advanced Micro Devices, and Riverbed Technology.

Currently, the analyst consensus on Arista Networks is Strong Buy and the average price target is $122.36, representing a -4.4% downside.

In a report issued on March 7, BMO Capital also reiterated a Buy rating on the stock with a $130 price target.

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