What happened

Shares of Ubiquiti Networks (NYSE:UI) climbed 10.2% in the month of June, according to data provided by S&P Global Market Intelligence, rebounding from a more modest 6% drop in the month of May following the network hardware specialist's mixed fiscal third-quarter 2017 report.

So what

To be fair, there was nothing not to like about Ubiquiti Networks' actual quarterly results the month before last. The company confirmed that revenue grew 30.5% year over year to $218.4 million and adjusted earnings increased 23.8% to $0.78 per share. Both were near the high ends of Ubiquiti's previous financial guidance, which called for revenue of $210 million to $220 million and earnings per share of $0.73 to $0.79.

But shares declined at the time because Ubiquiti told investors to expect earnings per share in the current quarter of $0.70 to $0.75, with revenue of $215 million to $225 million. Analysts, on average, were looking revenue slightly below the midpoint of that range to translate to earnings of $0.76 per share. According to management at the time, research and development expenses are expected to climb as a percentage of total revenue this quarter and will eat into those profits -- an unsurprising move, as I wrote at the time, given Ubiquiti's propensity for disrupting competitors and taking market share by creating innovative new products.

Ubiquiti Networks AmpliFi

Ubiquiti's new AmpliFi WiFi hardware is now available at leading retail outlets. Image source: Ubiquiti Networks.

Now what

To be sure, there were no new company-specific developments to spur last month's rebound. But that slight bottom-line guidance shortfall was hardly deserving of the subsequent drop that Ubiqiuti shareholders watched, especially as it seems likely Ubiquiti Networks is following its usual habit of underpromising and overdelivering. In the end, if that turns out to be the case, I see no reason the stock won't continue to climb from here.

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