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Ubiquiti Buoyed by a Flexible Business Model: Worth a Buy Now?
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Key Takeaways
UI benefits from healthy order trends, broad enterprise demand and stronger inventory planning.
UI's wireless platforms support broadband, backhaul, routing, WLAN, video surveillance and M2M needs.
R&D investments, UniFi upgrades and disruptive pricing help UI expand its market and support growth.
Ubiquiti Inc. (UI - Free Report) employs a flexible global business model and community-driven operating structure to support growth across evolving networking markets. Its operating model is backed by a highly engaged network of service providers, distributors, value-added resellers, systems integrators and corporate IT professionals. Effective management of more than 100 distributors and master resellers has improved demand visibility and inventory planning. The company continues to benefit from healthy order trends and broad-based enterprise demand.
Key Growth Drivers of UI
With the wide proliferation of the Internet and exponential growth in demand for data traffic driven by bandwidth-intensive applications like video, audio, online gaming and social networking, the need for faster and seamless connectivity has increased manifold. To address these higher broadband access needs, wireless networks have emerged as an attractive alternative to traditional wired networks, as these require relatively lower capital investments and operating costs than the latter.
New York, NY-based Ubiquiti perfectly fits this bill with a comprehensive portfolio of networking products and solutions. Its service provider product platforms offer carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems and routing. Its enterprise product platforms provide wireless LAN infrastructure, video surveillance products and machine-to-machine communication components.
Operational Efficiency, R&D Focus Lend Support
Ubiquiti aims to benefit from significant growth opportunities in both emerging and developed economies. These include a relentless pursuit by emerging countries to stay connected with the world through the adoption of wireless networking infrastructure as developed economies aim to bridge the demand-supply gap for higher bandwidth.
The company has made significant investments to optimize inventory levels by reducing lead times to support the increasing customer demand. Ubiquiti follows a scalable community-led approach based on product feedback from customers, while periodic reporting by channel partners has added to operational strength. We expect this resilient business model to contribute significantly to its growth momentum through disruptive price offerings.
In addition, Ubiquiti spends significantly on research and development (R&D) activities to develop innovative products and state-of-the-art technology to expand its addressable market and stay on the cutting edge of networking technology. The company believes its new product pipeline will help it increase average selling prices for high-performance, best-value products, thus boosting the top line. It upgraded the UniFi ecosystem, which includes hotspot analytics and high-density WLAN improvements and added new features to the AmpliFi product family.
The company’s product launches at disruptive prices helped it beat rivals to a great extent. Also, the reduction of labor-related costs is one of the chief highlights of the R&D initiatives. The company believes investments in R&D, inventory and operations management will help it expand the addressable market and maintain its dominant foothold in the industry.
Price Performance
Ubiquiti has surged 55.1% in the past year compared with the industry’s growth of 57.7%. It has outperformed peers like Ericsson (ERIC - Free Report) but lagged Nokia Corporation (NOK - Free Report) . While Ericsson has gained 45.1%, Nokia soared 179.2% over this period.
One-Year Stock Price Performance of UI
Image Source: Zacks Investment Research
Moving Forward
Ubiquiti’s proprietary communication platform and community-led support structure help reduce operating costs while improving customer engagement and product deployment efficiency. The company has continued to optimize inventory levels and improve supply availability to support growing customer demand. With multiple secular growth drivers supporting demand, the company appears well-positioned to deliver sustainable long-term growth.
With a favorable Zacks Rank and healthy growth dynamics, Ubiquiti appears primed for further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock now.
View the Zacks #1 Rank List
Image: Bigstock
Ubiquiti Buoyed by a Flexible Business Model: Worth a Buy Now?
Key Takeaways
Ubiquiti Inc. (UI - Free Report) employs a flexible global business model and community-driven operating structure to support growth across evolving networking markets. Its operating model is backed by a highly engaged network of service providers, distributors, value-added resellers, systems integrators and corporate IT professionals. Effective management of more than 100 distributors and master resellers has improved demand visibility and inventory planning. The company continues to benefit from healthy order trends and broad-based enterprise demand.
Key Growth Drivers of UI
With the wide proliferation of the Internet and exponential growth in demand for data traffic driven by bandwidth-intensive applications like video, audio, online gaming and social networking, the need for faster and seamless connectivity has increased manifold. To address these higher broadband access needs, wireless networks have emerged as an attractive alternative to traditional wired networks, as these require relatively lower capital investments and operating costs than the latter.
New York, NY-based Ubiquiti perfectly fits this bill with a comprehensive portfolio of networking products and solutions. Its service provider product platforms offer carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems and routing. Its enterprise product platforms provide wireless LAN infrastructure, video surveillance products and machine-to-machine communication components.
Operational Efficiency, R&D Focus Lend Support
Ubiquiti aims to benefit from significant growth opportunities in both emerging and developed economies. These include a relentless pursuit by emerging countries to stay connected with the world through the adoption of wireless networking infrastructure as developed economies aim to bridge the demand-supply gap for higher bandwidth.
The company has made significant investments to optimize inventory levels by reducing lead times to support the increasing customer demand. Ubiquiti follows a scalable community-led approach based on product feedback from customers, while periodic reporting by channel partners has added to operational strength. We expect this resilient business model to contribute significantly to its growth momentum through disruptive price offerings.
In addition, Ubiquiti spends significantly on research and development (R&D) activities to develop innovative products and state-of-the-art technology to expand its addressable market and stay on the cutting edge of networking technology. The company believes its new product pipeline will help it increase average selling prices for high-performance, best-value products, thus boosting the top line. It upgraded the UniFi ecosystem, which includes hotspot analytics and high-density WLAN improvements and added new features to the AmpliFi product family.
The company’s product launches at disruptive prices helped it beat rivals to a great extent. Also, the reduction of labor-related costs is one of the chief highlights of the R&D initiatives. The company believes investments in R&D, inventory and operations management will help it expand the addressable market and maintain its dominant foothold in the industry.
Price Performance
Ubiquiti has surged 55.1% in the past year compared with the industry’s growth of 57.7%. It has outperformed peers like Ericsson (ERIC - Free Report) but lagged Nokia Corporation (NOK - Free Report) . While Ericsson has gained 45.1%, Nokia soared 179.2% over this period.
One-Year Stock Price Performance of UI
Image Source: Zacks Investment Research
Moving Forward
Ubiquiti’s proprietary communication platform and community-led support structure help reduce operating costs while improving customer engagement and product deployment efficiency. The company has continued to optimize inventory levels and improve supply availability to support growing customer demand. With multiple secular growth drivers supporting demand, the company appears well-positioned to deliver sustainable long-term growth.
Ubiquiti currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
With a favorable Zacks Rank and healthy growth dynamics, Ubiquiti appears primed for further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock now.