Riverbed Under Pressure

Riverbed (RVBD) shares are under pressure this morning as Goldman Sachs analyst Simona Jankowski launched coverage of the company with a Sell rating and $15 price target.

Jankowski says the company’s share of the WAN optimization market has likely flattened out, and that the growth of the sector will slow below Street expectations. Jankowski contends that WAN optimization functionality will be integrated into routers, that desktop virtualization diminishes the need for WAN optimization and that competition is increasing. While Jankowski expects EPS growth of 40% compounded over the next 5 year, she says that it not enough to support a P/E of 75 2009 estimated EPS.