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Gigamon Inc. Message Board

  • highflier2go highflier2go Jan 31, 2014 11:36 AM Flag

    Goldman Sachs Upgrades Gigamon (GIMO) to Buy, Sees 36% Upside

    Goldman Sachs upgraded Gigamon (NYSE: GIMO) from Neutral to Buy with a price target of $38 Following the 22% pullback since the company’s 3Q13 positive preannouncement on October 21, 2013.

    "We believe the pullback was primarily driven by an operating margin guide- down for 4Q13 and lower FY14 operating margin outlook since Gigamon inadvertently hit its long-term operating margin target in 3Q13 (23.5% vs. target of 23-28%) due to slower than expected headcount additions)," analyst Kent Schofield said. "We believe Gigamon's market/technology leadership in the underpenetrated network visibility fabric market will produce better than expected CY14 results and see 36% upside to our $38 12-month price target."

    The analyst sees Gigamon outperforming reset expectations due to three key drivers: (1) Distribution agreement with Arrow Electronics will provide Gigamon with meaningful incremental revenue; (2) Gigamon can meet their above consensus EPS estimates and still grow headcount 31% yoy in 3Q14; (3) Gigamon's higher than peers' revenue growth and long-term operating target to eliminate an unwarranted discount to peers.

    Shares of Gigamon closed at $28.02 yesterday, with a 52 week range of $23.02-$41.81.

12.23+0.03(+0.25%)11:57 AMEDT

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