Ubiquiti Downgraded At JMP: What Shareholders Should Know

• JMP downgraded shares of Ubiquiti Networks Inc (NASDAQ: UBNT) from Market Perfom to Market Underperform on Monday.
• The experts set a $26 price target for the stock.
• Shares of Ubiquiti are down more than 6 percent on Monday trading.

In a report issued Monday, JMP analysts Erik Suppiger and John Lucia downgraded shares of Ubiquiti to Underperform on the belief that the company’s entry into the solar market carries an elevated execution risk, and the lack of confidence in the potential of its new wireless product announcements to lead to substantial competitive gains or relevant catalysts.

In fact, the experts recently attended the company’s NEXT event and the WISPAPALOOZA tradeshow, and left feeling incrementally negative on Ubiquiti, especially after its new solar panel system, sunMAX, was presented. According to the note, the analysts feel “management failed to address major business issues associated with entering this market,” and the firm’s checks suggest there is “limited interest, let alone enthusiasm, in selling/installing it across Ubiquiti's WISP reseller channel.”

Related Link: Slowing Growth At Ubiquiti Makes BMO Bearish

The checks also indicate WISPs were “underwhelmed” by the wireless products the company presented in its NEXT event. This particularly concerns the experts, as the checks show that the environment has become considerably more competitive over the past year, particularly in North America.

Furthermore, Suppiger and Lucia are also “concerned that turnover at the Board and senior management levels in finance and across engineering elevate execution risk and may lead to changes in the company's target model.”

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.