Technology

Deutsche Bank's Five Stocks That Can Dominate WLAN Space

As the wireless equipment business heats up, the larger the footprint and strength of the top companies, the more likely they will continue to dominate the space, especially in wireless local area networking (WLAN).

A new research report from Deutsche Bank questions whether there is room for both the number of players and on the whole, profitability. Each standalone WLAN company has promised
Wall Street and investors over the long term that its respective business model had leverage. While some of these companies commanded significant gross margins, upward of an astonishing 70% in some cases, they are still unable to expand their operating margin despite promising the opposite. In other words, it is a survival of the fittest scenario, and it appears the biggest and strongest will continue to win the battles.

Here are the five stocks rated Buy at Deutsche Bank that will continue to dominate.

Ciena Corp. (NYSE: CIEN) is a company that many analysts, including the Deutsche Bank team, believe could be the top beneficiary of the increase in wireless spending. The company is rapidly reducing its losses, and the earnings growth outlook for the next five years is also quite promising. According to Yahoo! Finance, investors can expect Ciena’s earnings to improve at an annual rate of 16.7% for the next five years. The Deutsche Bank price target for the stock is $30. The Thomson/First Call price target is $28.50. Ciena closed Monday at $21.66 a share.

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Cisco Systems Inc. (NASDAQ: CSCO) has continued a string of positive news to Wall Street that began with its earnings surprise in May. The Deutsche Bank team cited several positive catalysts in the pipeline for Cisco, its dominance in wireless equipment and its undisputed 900-pound gorilla status in the industry. Many firms on Wall Street still feel that the stock is providing investors a good entry point. Shareholders are paid a solid 3.1% dividend. The Deutsche Bank price target is $30. The consensus target for the networking giant is $25.61. Cisco closed Monday at $24.85.

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