ARRIS Group Emerges From Motorola Acquisition Stronger Than Expected, 2015 Outlook Positive

In a report published Tuesday, Brean Capital analyst Todd Mitchell reiterated a Buy rating and $36.00 price target on ARRIS Group, Inc. (NASDAQ: ARRS).

In the report, Brean Capital noted, "Shares of ARRS underperformed in 2H14 after cautionary remarks from management about the potential for M&A dislocation at year-end. However, we think there is a still a lot of goodwill with investors that made out well in the year preceding, after Arris emerged from the Motorola acquisition stronger and faster than expected. Going into the print, we think that expectations for 4Q14 results and 1Q15 guidance are muted, and that the market has already absorbed the potential for light 4Q14 results and/or a negative 1Q15 year-over-year guide."

The report continued, "The question seems to be, will this overhang of uncertainty be extended into 2Q15? We take the view that Comcast/TWC (CMCSA $59.46, Buy; TWC $149.74, Hold) will be approved in the next 90 days and there will be less disruption to Arris' business than is currently being factored in by the market. Moreover, we think the company will backfill its historically concentrated customer base in 2015 with share gains in international markets, mitigating financial risk of its concentrated customer base through diversification, and driving upside to expectations in 2H15. As a result, we reiterate our Buy rating and $36 target price."

ARRIS Group closed on Friday at $26.69.