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Why Ubiquiti Networks Stock Popped 33.4% in February

By Steve Symington – Updated Apr 12, 2019 at 9:10AM

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The disruptive networking specialist easily beat expectations for its holiday quarter.

What happened

Shares of Ubiquiti Networks (UI 2.51%) climbed 33.4% in February, according to data from S&P Global Market Intelligence, after the networking hardware company released better-than-expected quarterly results.

Ubiquiti stock jumped 16% on Feb. 8, 2019, alone -- the first trading day after its fiscal second-quarter 2019 report hit the wires -- then continued to drift higher for the rest of last month. 

Ubiquiti Networks wireless router on a table next to a smartphone and keys


So what

There was little not to love about Ubiquiti's performance during the holiday season. Revenue climbed 22.5% year over year, to $307.3 million, while adjusted earnings rose 75% to $1.33 per share. Both figures easily topped analysts' consensus predictions at the time for earnings of $1.08 per share on revenue of $276.4 million.

Within its top line, revenue from Ubiquiti's service provider technology segment fell 5.6%, to $113.2 million. But those declines were more than offset by a 48.2% increase in sales from its enterprise technology segment, which notably includes its consumer-focused AmpliFi product line.

Check out the latest earnings call transcripts for the companies we cover.

Now what

Looking forward, Ubiquiti Networks also reiterated its full fiscal-year guidance for revenue in the range of $1.1 billion to $1.2 billion, with earnings per share of $4.00 to $4.80. But given its relative outperformance in the first half, most analysts on Wall Street are already -- and understandably -- modeling revenue and earnings near the high ends of those ranges. And if Ubiquiti Networks can sustain the momentum of its underlying business beyond the lucrative holiday season, I see no reason why its stock won't continue to march higher from here.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Ubiquiti Networks. The Motley Fool has a disclosure policy.

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