Extreme Networks' (EXTR) product demand trends offer confidence in the long-term model, with fiscal 2027 likely to mark the growth trough, UBS said in a research report emailed Monday.

Management's bullish sentiment on product demand was tempered by the ongoing platform transition as the company consolidates subscription and support agreements onto Platform ONE, analysts wrote.

They added that as the platform transition proceeds, subscription and support revenue growth could slow from 9% in fiscal 2026 to 6% to 7% in 2027.

The company secured a new DDR4 memory source, improving visibility into 2027 product bill-of-materials costs, and should contribute to a sequential increase in balance sheet inventory, according to the note.

Sequentially higher component costs will make pricing a vital lever for offsetting margin pressure in the future, according to UBS.

The brokerage reiterated its neutral rating on the stock and price target of $28 per share.

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