Riverbed Technology (RVBD) has had a good week so far after a pretty dismal year. This beaten down stock is finally picking up some positive catalysts and analyst upgrades. It might be worth averaging into given its valuation and a selloff that has brought down the stock by 60% over the last year.
Recent positive catalysts for Riverbed:
- Needham initiated Riverbed as a "Strong Buy" today.
- This comes a day after Jefferies upped its rating to a "Hold" from "Underperform."
- Gabelli & Company also initiated the shares as a "Buy" in late May.
- The stock has long term technical support at these levels (See Chart)
"Riverbed Technology provides solutions to the fundamental problems associated with information technology performance across wide area networks in the United States and internationally." (Business description from Yahoo Finance)
4 reasons RVBD is has good value at $16 a share:
- The company has a fortress balance sheet with almost $500mm in net cash (more than $3 a share) which represents more than 20% of the stock's current market capitalization.
- RVBD has a projected five year PEG of under 1 (.73) and is selling at the bottom of its five year valuation range based on P/S and P/CF.
- Although growth has slowed, analysts still expect robust revenue growth in the teens for both FY2012 and FY2013. It also is priced at just over 13 times forward earnings, a steep discount to its five year average (32.7).
- The 32 analysts that cover the stock have a median price target of $23.50 a share, approximately 50% above the current price level of the stock.