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Here's Why Ubiquiti (UI) is a Healthy Investment Bet Now
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Shares of Ubiquiti Inc. (UI - Free Report) have surged 39.1% over the past six months, driven by an accretive customer base and healthy revenues on the back of a flexible business model.
With the wide proliferation of the Internet and exponential growth in demand for data traffic driven by bandwidth-intensive applications like video, audio, online gaming and social networking, the need for faster and seamless connectivity has increased manifold. In order to address these higher broadband access needs, wireless networks have emerged as an attractive alternative to traditional wired networks, as these require relatively lower capital investments and operating costs than the latter.
New York, NY-based Ubiquiti perfectly fits this bill with a comprehensive portfolio of networking products and solutions. Its service provider product platforms offer carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems and routing. Its enterprise product platforms offer wireless LAN infrastructure, video surveillance products and machine-to-machine communication components.
Backed by a rapidly growing and highly engaged community of service providers, distributors, value-added resellers, systems integrators and corporate IT professionals, referred to as the Ubiquiti Community, the company’s business model is highly flexible and adaptable to market demands. Ubiquiti maintains a proprietary network communication platform that is committed to reducing operational costs by using a self-sustaining mechanism for rapid product support and dissemination of information by leveraging the strength of the Ubiquiti Community.
Ubiquiti aims to benefit from significant growth opportunities in both emerging and developed economies. These include a relentless pursuit by emerging countries to stay connected with the world through the adoption of wireless networking infrastructure as developed economies aim to bridge the demand-supply gap for higher bandwidth.
Moreover, the company’s effective management of its strong global network of more than 100 distributors and master resellers has improved its visibility for future demand as well as inventory management techniques. The company has also made significant investments to optimize inventory levels by reducing lead times, meet increasing demand and support the growing number of customers. Ubiquiti follows a scalable community-led approach based on product feedback from customers, while periodic reporting by channel partners has added to operational strength. We expect this resilient business model to contribute significantly to its growth momentum through disruptive price offerings.
In addition, Ubiquiti spends significantly on research and development (R&D) activities for developing innovative products and state-of-the-art technology to expand its addressable market and stay on the cutting edge of networking technology. The company believes its new product pipeline will help it increase average selling prices for high-performance, best-value products, thus raising the top line. It upgraded the UniFi ecosystem, which includes hotspot analytics and high-density WLAN improvements, and added new features to the AmpliFi product family. The company’s strategic product launches at disruptive prices helped it beat rivals to a great extent.
Apart from launching products, reduction of labor-related costs also remains one of the chief highlights of the R&D initiatives. The company believes investments in R&D, inventory and operations management will help it expand the addressable market and maintain its dominant foothold in the industry. Consequently, the stock appears to be an enticing investment option in the volatile market.
Other Stocks to Consider
Arista Networks, Inc. (ANET - Free Report) , sporting a Zacks Rank #1 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experiences. Arista has a long-term earnings growth expectation of 17.2% and delivered an earnings surprise of 15%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. Arista is increasingly gaining market traction in 200 and 400-gig high-performance switching products. It is well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
CommScope Holding Company, Inc. (COMM - Free Report) , sporting a Zacks Rank #1 at present, has long-term earnings growth expectations of 18.1%.
It is a premier provider of infrastructure solutions, including wireless and fiber optic solutions, for the core, access and edge layers of communication networks. The company has created a niche market for itself, helping customers scale network capacity, delivering better network response time and performance, and simplifying technology migration.
Light & Wonder, Inc. (LNW - Free Report) , sporting a Zacks Rank #1 at present, has long-term earnings growth expectations of 54.3% and delivered an earnings surprise of 39.6%, on average, in the trailing four quarters.
It is a leading developer of technology-based products and services and associated content for the gaming, social and digital gaming industries globally. Las Vegas-based Light & Wonder reported revenues of $756 million in the first quarter of 2024. The company operates under three operating segments – Gaming, SciPlay and iGaming.
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Here's Why Ubiquiti (UI) is a Healthy Investment Bet Now
Shares of Ubiquiti Inc. (UI - Free Report) have surged 39.1% over the past six months, driven by an accretive customer base and healthy revenues on the back of a flexible business model.
With healthy fundamentals, this Zacks Rank #2 (Buy) wireless equipment manufacturer appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Growth Drivers
With the wide proliferation of the Internet and exponential growth in demand for data traffic driven by bandwidth-intensive applications like video, audio, online gaming and social networking, the need for faster and seamless connectivity has increased manifold. In order to address these higher broadband access needs, wireless networks have emerged as an attractive alternative to traditional wired networks, as these require relatively lower capital investments and operating costs than the latter.
New York, NY-based Ubiquiti perfectly fits this bill with a comprehensive portfolio of networking products and solutions. Its service provider product platforms offer carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems and routing. Its enterprise product platforms offer wireless LAN infrastructure, video surveillance products and machine-to-machine communication components.
Backed by a rapidly growing and highly engaged community of service providers, distributors, value-added resellers, systems integrators and corporate IT professionals, referred to as the Ubiquiti Community, the company’s business model is highly flexible and adaptable to market demands. Ubiquiti maintains a proprietary network communication platform that is committed to reducing operational costs by using a self-sustaining mechanism for rapid product support and dissemination of information by leveraging the strength of the Ubiquiti Community.
Ubiquiti aims to benefit from significant growth opportunities in both emerging and developed economies. These include a relentless pursuit by emerging countries to stay connected with the world through the adoption of wireless networking infrastructure as developed economies aim to bridge the demand-supply gap for higher bandwidth.
Moreover, the company’s effective management of its strong global network of more than 100 distributors and master resellers has improved its visibility for future demand as well as inventory management techniques. The company has also made significant investments to optimize inventory levels by reducing lead times, meet increasing demand and support the growing number of customers. Ubiquiti follows a scalable community-led approach based on product feedback from customers, while periodic reporting by channel partners has added to operational strength. We expect this resilient business model to contribute significantly to its growth momentum through disruptive price offerings.
In addition, Ubiquiti spends significantly on research and development (R&D) activities for developing innovative products and state-of-the-art technology to expand its addressable market and stay on the cutting edge of networking technology. The company believes its new product pipeline will help it increase average selling prices for high-performance, best-value products, thus raising the top line. It upgraded the UniFi ecosystem, which includes hotspot analytics and high-density WLAN improvements, and added new features to the AmpliFi product family. The company’s strategic product launches at disruptive prices helped it beat rivals to a great extent.
Apart from launching products, reduction of labor-related costs also remains one of the chief highlights of the R&D initiatives. The company believes investments in R&D, inventory and operations management will help it expand the addressable market and maintain its dominant foothold in the industry. Consequently, the stock appears to be an enticing investment option in the volatile market.
Other Stocks to Consider
Arista Networks, Inc. (ANET - Free Report) , sporting a Zacks Rank #1 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experiences. Arista has a long-term earnings growth expectation of 17.2% and delivered an earnings surprise of 15%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. Arista is increasingly gaining market traction in 200 and 400-gig high-performance switching products. It is well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
CommScope Holding Company, Inc. (COMM - Free Report) , sporting a Zacks Rank #1 at present, has long-term earnings growth expectations of 18.1%.
It is a premier provider of infrastructure solutions, including wireless and fiber optic solutions, for the core, access and edge layers of communication networks. The company has created a niche market for itself, helping customers scale network capacity, delivering better network response time and performance, and simplifying technology migration.
Light & Wonder, Inc. (LNW - Free Report) , sporting a Zacks Rank #1 at present, has long-term earnings growth expectations of 54.3% and delivered an earnings surprise of 39.6%, on average, in the trailing four quarters.
It is a leading developer of technology-based products and services and associated content for the gaming, social and digital gaming industries globally. Las Vegas-based Light & Wonder reported revenues of $756 million in the first quarter of 2024. The company operates under three operating segments – Gaming, SciPlay and iGaming.