Small-Cap Watch: Infoblox (BLOX) Rebounds 18% on Positive Analyst Comments by TechStockProspector


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									                                   Robert DeFrancesco’s
                           Tech-Stock Prospector
October 11, 2013

Infoblox (BLOX) Rebounds 17% On Positive Analyst Comments

After falling 18% from the recent high of $45.50, shares of Infoblox (BLOX, $43.70),
a provider of automated network control and security solutions, have quickly
rebounded 17% from Wednesday’s intraday low of $37.26.

With some Wall Street analysts defending the stock on the pullback, traders bought
the dip.

Sterne Agee yesterday upgraded Infoblox to ‘Buy’ with a price target of $47, saying
the company has built a strong technical lead in the IP address management (IPAM)
market and is expanding its presence in security.

Discover the companies expected to benefit from The Internet of Things. Download
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Pacific Crest today increased its Infoblox price target to $52 because it believes the
automation tools market is in the early stages of going mainstream and that the
company’s 6% penetration rate in its TAM is low, providing plenty of room for
growth. The firm thinks Infoblox has a lot of opportunity to build out its business
with partners VMware (VMW) and FireEye (FEYE).

On Tuesday, UBS said it sees several growth drivers for Infoblox (including the new
security business) and raised its price target to $46 from $42. The firm expects
Infoblox to take advantage of a large and growing addressable market. UBS also
mentioned the company’s low penetration rate and ability to bring on new
customers thanks to an expanding sales force.

During the first week of September, buyers surged into Infoblox after the company
put up particularly strong fiscal Q4 (July) results, sending the shares up more than
15% in one session on nearly 6x average daily volume.

In the latest quarter, revenue rose 40% to $63.1 million, beating the consensus
estimate by 6.5%, with product revenue jumping 52% (accelerating from 37%
growth in FQ3) to $36.7 million. Infoblox added more than 200 new accounts and
now has a customer base totaling 6,700+. Results in FQ4 were strong across all
regions: Americas +39%, EMEA +36% and APAC +52%.

Demand for the DNS firewall exceeded expectations. Just introduced in January,
Infoblox has seen strong uptake for the security solution (usually sold as a software
add-on to its core Trinzic products) across a wide range of verticals—including
financial services, energy, aviation, healthcare, U.S. federal and higher education. As
of now, the DNS firewall is mainly being sold into the customer base, but also brings
in new customers.

The security segment will continue to become a bigger part of Infoblox’s overall
business. The company’s new partnership with FireEye covers real-time threat
protection, as DNS is the primary vehicle used for advanced persistent threats

Following the release of the FQ4 results, Needham raised its Infoblox price target to
$47, saying customers are increasingly recognizing the mission-critical importance
of DNS/DHCP and the need for a bulletproof management and security system.

In fiscal 2013, Infoblox’s top line rose 33%. For fiscal 2014, Infoblox issued revenue
guidance of $270 million to $276 million (growth of 20% to 23% year over year).
The current consensus is $276.9 million. Given the positive momentum in the
business going into the new fiscal year, some analysts on Wall Street (thinking the
company is being conservative) are a lot more optimistic—the current high revenue
estimate stands at $284.7 million.

Back in the December 2012 issue of Tech-Stock Prospector (TSP #130), we called
Infoblox “a reasonably priced potential buyout candidate” when the shares were
trading at $17.25. The company is a lot more expensive now, sporting a market cap
of $2.2 billion.


Read the October 2013 issue of Tech-Stock Prospector on your Amazon Kindle or
Kindle for iPad/iPhone reading app.

Here are some of the topics covered in the latest issue:

*Trend Watch: The Internet of Things
*Cisco Systems benefits from the smart grid build-out
*Machine-data analysis made easy with Splunk
*A chipmaker sees opportunity in embedded intelligence
*Can the big rebound in Yahoo shares continue?
*Why F5 Networks is attracting more Wall Street bulls
*Akamai Technologies ramps up its sales force for new growth
*How the latest WiFi standard helps Aruba Networks
*4 small-cap takeover ideas for Oracle
*Apple bulls get more optimistic about new product cycles
*Palo Alto Networks gains visibility into security demand
*Tableau Software brings data visualization to the masses
*Why some big investors like Ruckus Wireless
*Recent IPO Benefitfocus brings cloud disruption to health insurance
*Fidelity boosts its stake in beaten down Riverbed Technology
*Fortinet secures SDN environments in the cloud
*Deal Report: Fusion-IO takeover chatter surfaces again

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Tech-Stock Prospector Managing Editor Rob DeFrancesco has more than 20
years of experience covering the tech sector. He is a former senior writer with
Louis Rukeyser’s Wall Street., launched in 2003, is an investment-research service
focused primarily on the networking, storage, security, wireless and software
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