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Analyst Watch: Acme Packet Has Room to Run


US stock index futures pointed to a lower open for Wall Street Tuesday, with attention zeroed in on the Federal Open Market Committee's (FOMC) decision later in the day after intense speculation that it may take new measures to ease monetary policy.

Here's what analysts and others are watching before the bell:

Catharine Trebnick, senior research analyst for telecom with Avian Securities, says Acme Packet should be a "core holding" for investors "because we are in the first inning of enterprise and carriers migration to all IP networks."

So what is Acme Packet?

In a nutshell, the company offers services and platforms for interactive communications across multiple networks — from voice over Internet protocol to residential services and mobile convergence.

"The company has over 62 percent market share, is a dominant supplier," Trebnick says. That's why she is so positive on Acme Packet and has a $36 price target.

She also likes that:

  • The company is growing revenues at 53 percent YoY and bottom line is growing at 110 percent YoY.
  • No other company in communication equipment sector has this type of top- and bottom-line guidance for 2010.
  • Long term we see the company growing revenues and earnings at +25 percent YoY.

Trebnick says the mobile segment will play a larger roll for Acme Packet in 2011 and 2012 as more operators deploy 4G networks. The companies will require session boarder controllers for real-time applications such as voip/video chat and any type of Over the Top service such as Apples facetime and Google talk.

Also, Global Mobile Suppliers Association (GSA) predicts 22 4G networks will be deployed by the end of 2010 and 80 operators in 33 countries are committed to LTE.

See more of what analysts and money managers have to say, and get the latest financial news. Watch Squawk on the Street every weekday morning starting at 9 a.m. ET.


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