IP Edge Routing Market: Redback (RBAK)

There is an interesting article over at Forbes, which mentions Redback Networks (RBAK).

The article quotes, Banc of America Securities analyst Tim Long who called the IP edge routing market an “emerging battleground” with a “robust opportunity for the winners,” in a recent report.

“While the incumbent vendors are sure to play a meaningful role in this market, we believe the IP edge paradigm is far from established, creating inroads for less established IP players,” said the research analyst.

Long is quoted as saying: "We believe Alcatel and Redback are best positioned to win share in this market given their small size, installed customer base, and strong product sets, while Cisco and Juniper are likely to cede modest share, but maintain their market leading positions."

Interestingly, Redback´s current market value is a bit over $1 billion, while Juniper is at over $9 billion and Cisco is over $120 billion. As you can see, Redback still has room to grow, in terms of stock value, so I´m holding on. Of course, the risk/reward at current prices is not that attractive for new investors, but with rising revenue and increasing profits throughout this year, as compared to losses last year, Redback´s stock should continue to perform well. Plus, you have the increasing demand for Redback shares from hedge funds and mutual fund managers who are looking to play the IP Infrastructure boom. Redback is one of the more attractive plays in the sector, so money flow from these funds into Redback should remain strong throughout 2006.