On Aug 20, 2014, we issued an updated research report on Ubiquiti Networks, Inc. (UBNT). The company is a leading provider of communication networks, telecom services and support solutions.
The rapid growth in the smartphone market is propelling the operators to expand network coverage and upgrade their networks for higher speed and capacity. Ubiquiti stands to benefit from this rush. According to Cisco Visual Networking Index, global Internet protocol, or IP traffic is expected to increase at a compound annual growth rate (CAGR) of 21% through 2013–2018.
The company, in order to tap the market potential, has been developing a range of products and platforms to satisfy the growing consumer needs. Recently, Ubiquiti launched a number of products including airMAX ac, UniFi Video, UniFi VoIP and EdgeSwitch. Apart from this, the company broadened its UniFi platform to include the Software Defined Networking technology. Moreover, it has launched a wireless Internet platform, Ubiquiti World Network (UWN). UWN is formed by a consortium of global independent Internet service providers (ISP), for providing ISPs with a unified platform to foster growth and innovation in the wireless industry, while catering to consumer needs.
Also, Ubiquiti’s strong research & development (R&D) team and cost-effective business strategies will drive growth going forward.
However, the company’s businesses, dispersed across the globe, are highly susceptible to the negative impacts of international political and economical conditions. Continued turmoil in regions like Russia, Ukraine, Israel, Argentina and especially Iraq, poses a substantial risk to Ubiquiti’s businesses as these regions generate about 6% of its total sales.
Stiff competition from other wireless equipment providers like Ericsson (ERIC), Aruba Networks, Inc. (ARUN) and Aviat Networks, Inc. (AVNW) also remains a concern for this Zacks Rank #3 (Hold) company.
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