Aruba Networks Nears 52-Week Highs as Company Swings to a Profit

Andrew Klips  |

After closing down during regular trading hours on Thursday and shedding nearly 9 percent the past two days, shares of Aruba Networks, Inc. (ARUN) are making up that ground, and then some, after delivering fiscal second-quarter earnings after the closing bell on Thursday that beat analyst expectations as the company swung to a profit.

For the quarter ended January 31, Aruba reported revenue of $155.4 million, up 23 percent from $126.3 million in the year prior quarter.  GAAP net income for the quarter was $5.0 million, or 4 cents per share, compared with a GAAP net loss of $11.4 million, or 11 cents per share, in fiscal Q2 2012.  Adjusted net income for the latest quarter, which excludes stock-based compensation, tax impacts and other items, was $27.3 million, or 22 cents per share, up from $19.4 million, or 16 cents per share, in the year prior quarter.

Analysts were predicting revenue of $151.98 million and adjusted net income of 19 cents per share.

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"We delivered another strong topline quarter and achieved our fifteenth consecutive quarter of record revenue," said Dominic Orr, Aruba's president and chief executive officer at Aruba Networks.

Aruba’s CFO, Michael Galvin, added, "…we generated a record $45.7 million in cash flow from operations, purchased 1.0 million shares of common stock under the repurchase program and ended the quarter with $402.3 million in cash, cash equivalents and short-term investments."

Sunnyvale, California-based Aruba sells wireless networking equipment that allows local and remote users to connect to corporate information technology resources.

Shares may have fallen under broad market pressures the past two days, certainly not because analysts don’t believe in the upside for Aruba.  29 analysts have either a “hold,” “buy” or “overweight” rating for the company.  Last week, Morgan Stanley (MS) boosted their rating to “overweight” from “equal weight” and raised their price target by $10, from $18 to $28.

Across the past 52 weeks, shares of ARUN are about even, but following a two-month nosedive from $23 in April to $12.36 in June, a steady reversal has followed.  Shares closed the regular session Thursday at $20.80, but have run back up near $24 in extended trading.  52-week highs for the company stand at $24.57.

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