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Is Aerohive Networks, Inc. (NYSE:HIVE) Potentially Undervalued?

Thomas Auclair

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Aerohive Networks, Inc. (NYSE:HIVE), which is in the communications business, and is based in United States, saw a significant share price rise of over 20% in the past couple of months on the NYSE. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Aerohive Networks’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Aerohive Networks

Is Aerohive Networks still cheap?

According to my valuation model, the stock is currently overvalued by about 27.49%, trading at US$3.93 compared to my intrinsic value of $3.08. This means that the opportunity to buy Aerohive Networks at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Aerohive Networks’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Aerohive Networks generate?

NYSE:HIVE Future Profit February 8th 19

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Aerohive Networks’s earnings over the next few years are expected to increase by 34%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in HIVE’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe HIVE should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on HIVE for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for HIVE, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Aerohive Networks. You can find everything you need to know about Aerohive Networks in the latest infographic research report. If you are no longer interested in Aerohive Networks, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.