Ahead of the Bell: Networking companies

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NEW YORK (AP) — A Jefferies & Co. analyst initiated coverage of networking companies on Tuesday, rating Riverbed Technology Inc. an “Underperform” based on his expectation of slower growth ahead.

“We’re fearful that some of the low-hanging fruit in the WAN optimization space has already been picked and the rate of market growth will diminish going forward,” the analyst wrote in a note to investors. Wide Area Network optimization, Riverbed’s bread and butter, helps improve the performance of applications shared over computer networks by reducing traffic.

Analyst George C. Notter has a target price of $15 on Riverbed. He also started coverage of Aruba Networks Inc., which makes equipment for corporate and campus Wi-Fi networks, with a “Hold” rating and a target price of $21.

Aruba, Notter said, has a “focused business model,” a broad product portfolio and a “best-of security, policy, and management technology.” He said Aruba represents an investment in the ongoing corporate migration to wireless networks, both an extension of and replacement of wired networks.

“Smartphones and tablets are becoming pervasive within corporate environments. We note that these devices don’t have Ethernet ports — they get network connectivity wirelessly,” he wrote in a note to investors.

In addition, Notter initiated F5 Networks Inc. at “Hold” and a target price of $70.

“Looking forward, we believe that F5 has a significant growth opportunity,” he said. Nonetheless, he added, the stock’s current value largely reflects the positive aspects” of the company’s prospects, especially in light of short-term economic concerns.

Shares of Riverbed climbed 20 cents in premarket trading to $22.53. Shares of F5 climbed $1.55, or 2 percent, to $78.93 ahead of the opening while Aruba was unchanged after closing at $22.83 on Monday.