EXTR - Extreme Networks marks 8% gain on Oppenheimer's bullish start

2023-06-28 10:40:02 ET

Extreme Networks ( NASDAQ: EXTR ) rose 7.5% in early Wednesday action following an initiation at Outperform by Oppenheimer, which sees the stock as a "major beneficiary" of a move toward enterprise edge cloud computing and artificial intelligence.

"The modern enterprise post-COVID is highly distributed with an increasing number of users and devices at the edge. Applications and workloads that require low latency should follow," analyst Timothy Horan said.

Extreme Networks ( EXTR ) is pursuing a strategy similar to that of Cloudflare ( NET ), toward critical edge infrastructure and software to enable the convergence of compute, network and security. That's a "much larger target market than its legacy networking, particularly for AI compute," Horan noted.

The company has identified a $33B total addressable market that could double as compute and security converge on the same infrastructure, he says. Extreme ( EXTR ) is a new challenger there, but that points to targeting customers in low-to-mid end markets that are often overlooked by legacy rival Cisco Systems ( CSCO ).

EXTR is also attractively valued at a 25% discount to the market (price/earnings ratio of 15), with potential to grow revenue and earnings more than 14% and 18% respectively over a five-year span, he said.

He's set a $35 price target, implying 43% more upside after Wednesday morning's gains.

Seeking Alpha analysts consider Extreme Networks ( EXTR ) a Buy on average , while Wall Street analysts see it as a Strong Buy . Seeking Alpha's Quant Ratings see the company as a Strong Buy as well .

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