Aerohive Networks Is A 'Wireless Specialist Poised To Take Market Share'

With some of its competitors being acquired by larger networking companies, Aerohive Networks Inc (NYSE: HIVE) is becoming the “go-to” wireless partner for networking vendors that lack wireless solutions, said D.A. Davidson’s Mark Kelleher, in a report.

Kelleher initiated coverage of the company with a Buy rating and price target of $10.

Poised To Grow

The analyst expects Aerohive Networks to continue to grow its revenues through strategic partnerships.

Kelleher pointed out that the wireless market was at present in the process of migrating from “Wave 1” to “Wave 2” technology, and the company had launched in first Wave 2 products in April, which contributed 21 percent of the total revenues by the September quarter.

“As a differentiator, HIVE incorporated dual 5 GHz radio technology, which allows its Wave 2 products to command a 25 percent premium over Wave 1 products. We believe the Wave 2 upgrade cycle will be a key element to driving revenue higher,” the analyst stated.

Well Positioned

Kelleher also believes Aerohive Networks is among the leading wireless provides to the K-12 education market, and with government subsidy issues having been resolved, the company is well positioned to benefit from the more than $1 billion in authorized Wi-Fi subsidy funds beginning to flow into the education market.

In the September quarter, the education vertical accounted for 40 percent of the company’s total revenues.

“Moving forward, we expect HIVE to target the retail, health, and enterprise markets, all of which should augment growth in the education market,” the analyst added.

At last check, shares of Aerohive were up 5.17 percent at $6.10.