Analyst boosts Aruba Networks target, estimates

RBC Capital Markets analyst Mark Sue raised his price target to $9 from $7 and kept a "Sector Perform" rating. The new target implies he expects the stock to jump about 31 percent over Thursday's $6.89 close.

Shares of the wireless networking equipment maker plummeted about 37 percent in February after the company preannounced a fiscal second-quarter loss. In April, the stock hit a 52-week low of $4.40, but since then it has risen about 57 percent.

The impact of the broader economy on the company's sales and earnings continues to worry many on Wall Street.

"It's still a rolling recovery when it comes information technology spending and pockets of strength appear to be offset by pockets of weakness," Sue said in a note to clients.

Despite sectorwide weakness, Aruba may be experiencing "better than expected demand" due to its new wireless 802.11n products, Sue said. The device operates as a type of high-speed wireless router.

The company's education, warehousing, logistics and federal sectors are seeing a better-than-expected increase in new products, he said.

Sue raised his fiscal 2008 revenue estimate to $174 million from $170 million. Analysts polled by Thomson Financial expect, on average, revenue of $176.6 million for the same period.

"In terms of the competition, Aruba's products remain highly differentiated from the likes of Cisco and Motorola and we believe Aruba's win rate against competitors remains consistent," Sue said.

Shares of Aruba Networks slipped 5 cents to $6.84 in midday trading.

Aruba Networks is set to post fiscal third-quarter results on May 22.