Aerohive Could Break Even In The Next 2 Quarters; Wunderlich Upgrades To Buy

Aerohive Networks Inc (NYSE: HIVE), a $200 million designer and developer of a cloud-managed mobile networking platform, saw its stock gain more than 8 percent on Thursday after the company reported a better-than-expected first-quarter report.

Following the earnings report, Matthew Robison of Wunderlich upgraded his rating on Aerohive's stock from Hold to Buy with an unchanged $5 price target as the company reported "more progress than we expected."

Quarter, In Review

According to Robison, Aerohive's quarter was supported by improvements in product development, better sales execution and an activity level from a key partner Dell, which even surpassed management's expectations in the quarter. In fact, the company is now expected to achieve break-even non-GAAP operating income and earnings per share in the current quarter, which is two quarters ahead of what the analyst was expecting.

Robison continued that Aerohive's era of burning "significant" cash has ended, and the company is now well positioned for revenue growth. Specifically, software subscription and services revenue came in better than expected in the quarter due to a growing acceptance of its software-as-a-service cloud controller and a strategy of offering less featured products at entry prices that can be upgraded later on.

Bottom line, Aerohive's report marks what could be the start of multiple expansions and the prospect of being bought out and taken private can't be ignored.

At time of publication, shares were up 8.09 percent at $4.01.

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