Shares of Riverbed Technology Inc. rose Wednesday as an analyst boosted his price target and said the network technology company's stock deserves to trade higher than its peers due to market leadership.
The stock gained 95 cents, or 6.8 percent, to $15.16 in midday trading.
Lazard Capital Markets analyst Ryan Hutchinson raised his price target to $20 from $18, implying he expects shares to rise 41 percent over Tuesday's $14.21 close. He rates shares "Buy."
The stock has taken a beating in recent months, and is down about 47 percent year to date.
Yet due to the San Francisco-based company's leadership in the WAN optimization market _ which Hutchinson values at about $15 billion _ Riverbed should be trading at a "meaningful premium to peers," he said.
A WAN, or wide area network, is a computer network spanning a broad geographic area.
Concerns that growth projections for the WAN market were overly optimistic have likely hampered the stock recently, Hutchinson said, noting that these concerns might not be a factor until at least 2010, if at all.
"Given the high anxiety around the name due to the macroeconomic environment and recent execution problems, we believe the market's reaction is unwarranted," Hutchinson said in a note to clients.
He raised his 2008 earnings estimate to 52 cents from 50 cents per share. Analysts polled by Thomson Financial expect, on average, earnings of 49 cents per share for the year.
"While the macroeconomic environment is challenging, our checks indicate that Riverbed is regaining its footing," Hutchinson said in a note to clients.
The new target comes after Riverbed reported in April a nearly 81 percent drop in first-quarter profit.
A company representative was not immediately available for comment.
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