Meru Slips After Q1; Think Starts At Buy; JMP More Cautious

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Meru Networks (MERU) shares are trading lower this morning after the company late yesterday reported Q1 results, the wireless LAN provider’s first as a public company. Meru went public March 31, on the last day of the quarter, at $15 a share.

For Q1, the company reported revenue of $19.6 million, up 28% from a year ago, with a loss of 20 cents a share.

JMP Securities analyst Douglas Ireland this morning launched coverage of the stock with a Market Perform rating, putting fair value at $17. He notes that the quarter was in line with expectations, but that there could be some confusion on the loss per share due to the share count the company used to compute the figure; the loss was only $97,000. Meanwhile, he cautions that the stock is trading at 78x his 2011 EPS estimate of 21 cents a share; he also notes that the company is in a highly competitive market that includes Cisco (CSCO), Hewlett-Packard (HPQ), Motorola (MOT) and :”a host of others.” Not least, he cautions that in September 2010 a lock-up expiration will free up 11 million shares for public sale; the company only has 14.9 million outstanding.ThinkEquity analyst Jonathan Rukyhaver picked up coverage today with a Buy rating and $19 target, citing “the company’s solid competitive position, strong product differentiation and distribution footprint in a rapidly growing market.”

MERU today is down 40 cents, or 2.5%, to $15.90.

Previously: Meru Networks: Cowen Launches At Outperform; Baird Neutral (May 10, 2010)