Extreme Networks, Inc (NASDAQ:EXTR)
Extreme Networks, Inc (NASDAQ:EXTR) bought Avaya networks in early March. Yesterday evening the company announced it is buying Brocade’s (BRCD) data-center networking business. Brocade’s shares are little changed – up less than 0.5%. However, shares of EXTR are up over 15% in mid-morning trading. EXTR shares ended the regular session yesterday at $6.46 and gapped up to open at $7.90 before hitting their inter-day high of $8.11. Volumes are trading at over 14 times their daily average.
San Jose, CA-based Extreme Networks, Inc. (NASD:EXTR) develops and manufactures wired and wireless network infrastructure equipment. It also develops software for network management, policy, analytics, security, and access controls. It also offers its proprietary ExtremeAnalytics – an analytics application that assists users in optimizing network performance. The company boasts 20,000 customers worldwide.
Following the news of the buyout, two firms reiterated their analyst’s ratings for Extreme Networks, Inc. (NASD:EXTR). DA Davidson reiterated their “Buy” rating with a price target increase from $7.50 to $10. Needham reiterated EXTR shares as a “Buy” and moved their target price from $7.00 to $9.50. It should be recognized that three other analysts rated EXTR shares as a “Strong Buy” prior to yesterday’s announcement.
Today’s price action resulted in EXTR shares nearly reaching their all-time highs. In January of 2014, EXTR shares hit $8.14 – $.03 higher than today’s inter-day high. But Extreme Networks, Inc. (NASD:EXTR) has been performing well. EXTR shares are up over 28% YTD, and up over 108% for the past year.
EXTR shares have a Relative Strength score of 76.53 which is encroaching on “over-bought” territory. Annual sales for the company in 2014 were $519.6 million. That figure was followed by sales of $552.9 million in 2015 and $528.4 million in 2016. Shareholder earnings have been negative. EPS for EXTR shares in 2014 were a loss of -$0.60, then in 2015 there was an EPS loss of-$0.72, followed in 2016 by a loss of -$0.31. Dilutive effects have been less bothersome. In 2014 there were 85.52 million shares outstanding and that number marginally increased to 103.07 by 2016.
I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.
About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.