Now that 2011 has passed and 2012 is upon us, it's worth evaluating the stocks you own and are interested in. Should you buy? Sell? Hold? Ignore? Today, we'll put these questions to Acme Packet
Acme Packet's Session Border Controllers, or SBCs, help broker and secure telephone calls made over the Internet. At Rule Breakers, we believe increased use of these devices will lead carriers to more broadly adopt the Internet for telephony while competing with Skype and Vonage
Forecasts for Acme Packet
|Median Target Stock Price||$35.09|
|Fiscal 2011 EPS Estimate||$1.04|
|Fiscal 2012 EPS Estimate||$1.25|
|Expected Annual Earnings Growth, Next 5 Years||23.1%|
|CAPS Rating (out of 5)||***|
Source: Yahoo! Finance.
How will 2012 go for Acme Packet?
Analysts are expecting below-average growth in 2012. Earnings are expected to improve 20% on a 19.7% increase in revenue. Management's trouble with closing deals could be feeding the skepticism. Roughly 60 different contracts worth $14 million were in process with a better-than-50% chance of closing 10 days before the end of the third quarter. None were signed.
In Q2, Acme Packet suffered a miss when the sales team failed to close a big deal with a carrier most thought to be AT&T
CEO Andy Ory believes the entire industry will follow. Over the long term, he's positioning Acme Packet to provide infrastructure for enabling enhanced services that use Internet Protocol -- the data-encoding language of the Web -- as a reference point. LTE broadband service may be the best-known example.
Both AT&T and Verizon are betting on LTE as a method for allowing customers to transmit vast amounts of data from smartphones, tablets, and other mobile devices. Sprint Nextel
Even so, there's no guarantee that an overhaul of the Public Switched Telephone Network, or PSTN, will benefit one company more than another. In the case of Acme Packet, investors will rightly point out that last February's outperformance was a distant memory as of earlier this month.
Yet discounting the stock on the basis of short-term misses also excludes something crucial: Acme didn't lose the AT&T deal, nor are there signs that Q3's pipeline delays will result in lost revenue. Acme Packet may be moving slower than investors would like, but it's still a first mover in an important, emerging market. And that makes it a strong candidate for any tech investor's Watchlist.
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