Whirly lollipop on orange background.

Gigamon (GIMO) provides enterprise networking technology to help improve visibility into the traffic traversing both physical and virtual networks with less impact on performance or stability of production environments. Screen Shot 2013 12 06 at 12 31 21 PM

The company came public back in June of 2013 in the middle of their filing range at $19. This GS deal did well with a first cay open of $23 and close of $29. Since then the shares have been as high as $40 and recently have settled back down to the $29 level again. The stock price may already reflect the additional supply of shares post-lockup.

At the current price the shares market cap of the company is $900M with an EV of just under $800M. The TEV/sales is a reasonable 6.1x but the company is still losing money.

Analyst estimates for 2013 of $140M in revenue reflect a continuation of the ~40% growth rate. 2014 estimates look conservative based on the company meeting current-year estimates. Non-GAAP earnings are estimated at 45c this year but down to 40c in 2014 (we’ll guess taxes) and then climb to 65c in 2015. On a GAAP basis profits are not forecast yet.

Long term the company believes they can achieve 23-28% operating margins based on their “target model” but given the incredible competition in the networking space they are in we see these as unachievable. However levels of 15% to 20% are likely. We differ mainly in how low sales, marketing and admin costs can get as a % of revenue.

It doesn’t look like the company has received any independent research analyst coverage yet outside of the 5 bankers on the deal. Their consensus view now is “hold” with a price objective of $37.

As a public company Gigamon has has kept the

Related Links:

Gigamon IPO presentation slides

Gigamon company website

Gigamon funding history

Some interesting commentary from an engineer on Gigamon

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