Why Ubiquiti Networks Shares Rose
May 31st 2012 5:12PM
Updated May 31st 2012 5:14PM
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 Ubiquiti Networks (NAS: UBNT) , a provider of wireless networking products and solutions, are headed higher by as much as 13% after receiving an analyst upgrade.
So what: Today's move higher is being precipitated by brokerage firm Wunderlich, which upgraded its rating on Ubiquiti to buy from hold while keeping its price target at $35. The move follows Wedbush Securities, which also initiated coverage of the stock with an outperform rating and a $29 price target earlier this month.
Now what: As with all analyst upgrades and downgrades they should be taken with a grain of salt and shouldn't change your investment thesis on a company despite the wild price swings they may cause. As a case in point, Wunderlich downgraded Ubiquiti to hold from buy just four weeks ago! Not much has changed fundamentally with Ubiquiti within that time period, yet Wunderlich has now done a complete flip-flop with its rating on the company. That's why I give little credence to analyst ratings.
As for Ubiquiti, the company reported a 130% increase in sales and a 79% jump in earnings last quarter; so if you're an optimist, I'd say your investment thesis still seems very much intact.
Craving more input? Start by adding Ubiquiti Networks to your free and personalized watchlist so you can keep up on the latest news with the company.
At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.
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