Earlier this year, with Ubiquiti Networks (NASDAQ: UBNT) trading in the low $60s, I wrote that the company could finish the year higher despite a 100% gain in 2016. That outlook looked foolish for the first half of the year, as Ubiquiti’s increased spending and lower margins scared off investors despite strong top-line growth. However, the company spiked 20% back into the mid-60s after its recent earnings report, and I think there’s more room to run.Ubiquiti posted revenue of $228 million versus previous guidance of $215-$225 million and non-GAAP EPS of $0.75 versus guidance of $0.70-$0.75.Gross margin, which I noted was an issue to watch, came in at 45.1%, down from 48.3% in the year-ago period. This was because growth came from new products, that currently have lower gross margins, but which are expected to increase over time as the volumes rise and the company achieves cost efficiencies. A one-time $4 million research and development milestone payment also cut EPS by roughly $0.04 per share. Continue reading
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