Analyst on UBNT

This is from Schwab’s news feed.

Saul

Bernstein analyst Pierre Ferragu is out pounding the table on Ubiquiti Networks (NASDAQ: UBNT) this morning.

According to Ferragu “This is the hidden gem we uncovered in our recent Data Networking launch. I feel we have an unusually strong conviction on this name, highly differentiated. Common wisdom in Data Networking, when it comes to finding growth stories is to look for innovation, and if you have read our initiation work, you know that s exactly what we don t like. Most of the time innovation is not sustainable. A company can have a good run with an innovating product, but it usually doesn t end so well. Ubiquiti is exactly about the contrary. They don t innovate, they target very mature technologies, introduce breakthrough pricing, usually 5x cheaper than traditional competitors and by doing that unlock vast untapped potential their competitors can t even see.”

The bottom line of the model is 1) 35% operating margin with a 45% gross margin, 2) unbeatable prices and 3) a model that creates its own growth, the analyst said.

The firm rates shares at Outperform with a price target of $65. “We think the company is announcing new products this year, probably by the end of the summer, and besides good sales momentum, that s the near term catalyst we expect,” he adds.

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Bernstein analyst Pierre Ferragu is out pounding the table on Ubiquiti Networks (NASDAQ: UBNT) this morning.

I hope he’s right - I just bought more this morning along with PSIX. Bought more BOFI on Monday. This selloff is starting to border on ridiculous.

If it’s out of fear of Russia, I don’t get it - it’s basically the entire world against Russia, Syria, and Venezuela. Gee, wonder who will win that one?

Jason

Saul,
I think they are going to knock it out of the park this next quarter also. They had a bad few quarters because of the counterfeiting issue and they were not managing their inventory very well. Not that they had to much inventory but to little. I have never seen the inventory turn overs in a telecommunication company that they had. One guy that writes a blog stated that he was ordering more equipment than he needed because he had a hard time getting the equipment. Technicians are calling other technicians fan boys because of how they rave about UBNT equipment. I consider this very bullish because if people are raving about it they will stick with the company. UBNT this quarter upped there inventory considerably and I am betting that they sell a good portion of it. I have been steadily adding more shares and as you can see I am extremely bullish on this company.

Andy

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Still looking at these guys and trying to figure out their place in the world of internet connectivity

IT friend said their equipment is high quality. He loves their stuff

Finally found a lengthy article that explains the net

http://entropyeconomics.com/wp-content/uploads/2014/02/How-t…

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If you look at the last picture Lekitkat and drew another box and put tier 3 in it that would be the customers of UBNT. Tier 3 providers would not peer connect to any customers up stream but would connect through a tier 2 or tier 1 provider. Ubnt might sell to some tier 2 providers also. But all Tier 1 providers and most Tier 2 providers would have their own radio towers and pay to have bandwidth in the licensed band which is over seen by the FCC. UBNT’s equipment only works within the unlicensed bands so most people would say that it is not as reliable as the licensed bands. (And they would be correct) But you can’t just get bandwidth in the licensed bands because everyone has already bought them up. So if you were someone that needed to have connectivity now either you would have to pay the people who already have the bandwidth or go with unlicensed. Going with unlicensed for a 1 gig circuit would cost you around 3000 dollars for the equipment and maybe around 1000 dollars a month for the bandwidth from the tier 1 companies. Going with a tier 1 or tier 2 on their licensed radio, and assuming you could get 1 gig it would probably be to costly. The biggest radio we have right now is an oc48 which is 48 sts1’s, a 1 gig circuit uses 21 sts1’s. So to think about UBNT’s customers they would be companies that are mostly smaller and they get their bandwidth from companies like Verizon, Sprint, Level 3, any tier 1 or tier 2 provider. The cheaper the better.

Hope this helps,
Andy

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hi Andy

thanks for keeping track of this conversation

What I am understanding is UBNT provides the equipment to WISPS and the WISPS are not selling commercial bandwidth but RF. This means they have to have someone else selling them the content that they sell to their subscribers. UBNT is not a content provider just sells equipment. Is that close? So WISPS are responsible for acquiring the internet connectivity that they in turn send to subscribers wirelessly through antennas/towers.

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What I am understanding is UBNT provides the equipment to WISPS and the WISPS are not selling commercial bandwidth but RF.

That’s right Lekitkat but I would state it this way. Wisps are selling unlicensed RF instead of Licensed RF. But you are correct that commercial bandwidth would be the licensed RF.

This means they have to have someone else selling them the content that they sell to their subscribers. UBNT is not a content provider just sells equipment.

Ok wisp do not sell content. They only sell the pipe. This is like the ISP’s in the 90’s that had dial up as their means of selling to customers. Do you remember Earthlink? These guys get you onto the internet. When you get onto the internet you can go anywhere for your content. Remember AOL and how they gave you access to the internet and content? That is not the function of the wisps. They don’t care about content they just want to give you a way to access the internet. They usually wont supply an email address, you can get that at yahoo, nor will they supply you a web page, although they could. UBNT is just like INFN, CIEN, NORTEl, CISCO, or any of the equipment providers. They give you equipment that allows you to provide pipes or bandwidth from point a to point b.

So WISPS are responsible for acquiring the internet connectivity that they in turn send to subscribers wirelessly through antennas/towers.

That’s it Lekitkat that is the function of the Wisp’s. They give you access to the internet. This is what you always hear of as the last mile. They give access to the internet and function in the last mile. The true end of the internet providing a pipe from your home and my home to the internet. Whether it is 56k of bandwidth or 1 gig of bandwidth.

Andy

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thanks Andy

now i just need to look at the actual company

Your welcome Lekitkat, anytime I can help you just ask.

Andy