RadiSys Corporation (RSYS)

[Mitshu35]

Roth 2016 Datacenter Technology Access Day Takeaways(9/9/16)

Radisys (RSYS, Buy, $6 PT) Radisys CEO and CFO met with a number of investors, many of whom had not paid attention to the story in several years. In our meeting as well as in others, the Company was primarily focused on its DC Engine and Flow Engine products and the opportunities that they represent.

Similar to the recent conference call, the company reiterated that it is relatively deep in the pipeline with at least six service providers who are evaluating its DC Engine solution. We believe at least two could be as big as Verizon (VZ) has proven to be already this year. The next generation Flow Engine is garnering strong customer interest as it vastly expands on the capabilities of its predecessor while delivering a truly disruptive cost and form factor.

We expect the next generation of Flow Engine to ramp into meaningful sales in 1H:17, delivering additional margin improvement. Given the magnitude of the DC Engine opportunity and the strong Flow Engine demand, we continue to see an attractive risk / reward opportunity for Radisys over the next 6-9 months.