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On Feb 11, Zacks Investment Research upgraded Ubiquiti Networks Inc. (UBNT - Analyst Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Ubiquiti has been witnessing rising earnings estimates on the back of strong second-quarter 2014 results. Moreover, this well-known wireless equipment provider delivered positive earnings surprises across all the last 4 quarters with an average beat of 11.3%. The long-term expected earnings growth rate for this stock is 35.5%   

Ubiquiti Networks reported fiscal second-quarter (ended Dec 31) results on Feb 6. Non-GAAP earnings per share came in at 47 cents, surpassing the Zacks Consensus Estimate by 6.8% and year-ago earnings of 2 cents.

Development in the company’s core business primarily drove the earnings. Ubiquiti’s consistent focus on expanding services by increasing investments in innovation and development was a key growth driver. Management’s executive abilities and opportunities in the enterprise business also contributed to the strong results.

Revenues also surged a robust 84.8%, due to increased transaction volumes and addition of new services for existing customers.

This apart, the company also launched Ubiquiti World Network (UWN), a wireless Internet platform. UWN is a consortium of independent Internet service providers (ISP) across the globe. It was designed to provide the ISPs with a unified platform to foster growth and innovation in the wireless industry while catering to consumers’ needs.

Following the upbeat second-quarter results, the Zacks Consensus Estimate for third-quarter 2014 rose 11.1% to 50 cents per share as 1 of the estimates was revised higher in the last 7 days. However, the estimates for fiscal 2014 and 2015 remained stagnant at $1.81 and $2.09, respectively in the last 7 days.

Other Stocks to Consider

Other stocks in the wireless equipment market worth considering are ShoreTel, Inc. (SHOR - Snapshot Report), Harris Corp. (HRS) and Juniper Networks, Inc. (JNPR - Analyst Report). While ShoreTel carries a Zacks Rank #1, Harris Corporation and Juniper Networks hold a Zacks Rank #2 (Buy).

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