Aruba Rises After Morgan Stanley Upgrade: San Francisco Mover

Aruba Networks Inc., a maker of computer-networking gear, rose to the highest price in more than four months in intraday trading after Morgan Stanley upgraded its rating and recommended buying the shares.

The Sunnyvale, California-based company advanced 6.1 percent to $22.43 at 3:48 p.m. in New York trading, after earlier touching $23.11, the highest since September. The stock had climbed 2 percent this year before today.

A Morgan Stanley survey shows that resellers for Aruba’s equipment expect 2013 demand to rise more than what they expected three months ago, New York-based Ehud Gelblum wrote today in a report. Aruba is also benefitting as companies buy more gear to allow employees to use their own mobile and tablet devices at work, a trend known as bring your own device.

“We expect stronger earnings growth to lead to multiple expansion,” Gelblum said. Revenue in calendar year 2013 should increase 22 percent, about the same as last year, he said, raising his 12-month price target on the stock to $28 from $18.

Morgan Stanley’s rating on the stock is now overweight, the equivalent of a buy. That’s up from an equalweight, or hold, recommendation.

Gelblum raised his estimate for fiscal 2014 earnings per share to $1.09. That’s 10 cents more than the average estimates from analysts, according to data compiled by Bloomberg.

Separately, the introduction of a new wireless standard, 802.11ac, isn’t affecting Aruba’s business as previously projected, Gelblum said. The company also will benefit from increased corporate orders, he said.

Morgan Stanley didn’t immediately respond to a request for an interview with Gelblum.

To contact the reporter on this story: Vivek Shankar in San Francisco at vshankar3@bloomberg.net

To contact the editor responsible for this story: Jeffrey Taylor at jtaylor48@bloomberg.net

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