Can Aruba Networks, Inc. (ARUN) Return to Fantasy Island?

Granted, Aruba’s wireless business was outperformed by Cisco in the recent quarter. But then again, Aruba grew revenue 21% in the recent quarter and as noted, it has grown revenue by almost 25% over the past five years. So the concern regarding Cisco is a bit exaggerated. Plus, Aruba’s new ClearPass 802.11n wireless network is beginning to steal market share from Cisco in several areas.

For that matter, if Cisco is not careful, it may have to succumb to some margin pressure. Aruba is beginning to deliver some higher win rates. One of which is the Aruba Instant Enterprise, a product catered toward the distributed enterprise that delivers a controller-less Wi-Fi solution, designed for optimal security while offering scalability. The impressive aspect is that this does not require any physical or virtual controllers.

What’s more, the Street should be encouraged by the acceptance of 802.11ac. This new standard has the potential to boost Wi-Fi networks to speeds that has only been seen on wired LANs. Essentially, for the same reasons CIOs and IT managers loved Aruba Networks in the early adoption of BYOD, they are going to fall in love with the company again. Plus, with the unveiling of these new products, investors should expect Aruba’s revenue to begin to pick up in the coming the quarters.

The issue however, is with the stock. Now that it’s made these gains over the past six months, are investors too late to the party? Not entirely. As noted above, Rajesh Ghai of Craig-Hallum is one of several analysts that cover the stock and has recently raised his target on the shares from $21 to $29, or 32% higher than a recent close of $22.

While there’s still a bit of risk in these shares, the upside potential is equally appealing. Besides, with Aruba’s strong books and impressive technology, I don’t expect this company to stay independent for too long. Today, although Aruba is a small rival to the likes of Check Point and Fortinet, that may not be the case by the end of the year.

The article Can Aruba Networks Return to Fantasy Island? originally appeared on Fool.com and is written by Richard Saintvilus.

Fool contributor Richard Saintvilus has no position in any stocks mentioned. The Motley Fool recommends Check Point Software Technologies, Cisco Systems, and F5 Networks. The Motley Fool owns shares of Check Point Software Technologies and F5 Networks.

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