Why Analysts Are Taking a Backseat on Infinera

By Chris Lange Updated Jan 13, 10:03AM EST · Published May 1, 10:20AM EDT

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Why Analysts Are Taking a Backseat on Infinera — © Thinkstock

Infinera Corp. (NASDAQ: INFN) saw its shares get crushed after beating earnings expectations in the first quarter. Revenues were in line but a little too soft, and its outlook for the second quarter was a disappointment. As a result, this stock hit a new 52-week low on Thursday. Analysts took this opportunity to weigh in on the stock and what direction it is headed.

Revenue for the most recent quarter was $245.0 million, compared to $260.6 million in the fourth quarter of 2015 and even to $186.9 million in the first quarter from 2015. Earnings per share (EPS) were $0.19, versus $0.21 in the fourth quarter and $0.16 in the year-ago quarter. The consensus estimates called for $0.17 in EPS on $246.2 million in revenue.

The operating margin for the quarter was 12.3%, down slightly from 12.7% in the fourth quarter and barely up from 12.2% in the first quarter of 2015.

Tom Fallon, CEO of Infinera, commented on the earnings release:

We continued to execute well in the first quarter, winning deals across our product portfolio and delivering strong financial results. Responding to ongoing growth in bandwidth demand, customers are increasingly turning to Infinera to address the advanced scalability and efficiency required to operate their networks. By continuing to deliver the most innovative solutions and the Infinera Experience to our customers, I am confident that we will continue to gain market share across the end-to-end optical transport market and generate outstanding bottom line results.

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On the books, cash, cash equivalents and short-term investments totaled $275.1 million, compared to $274.7 million at the end of 2015.

A few analysts issued calls on Infinera after the earnings report:

Citigroup downgraded to it Neutral from Buy and lowered its price target to $17 from $20.
Goldman Sachs has a Neutral rating and lowered its price target to $15 from $16.
Jefferies has a Buy rating and lowered its price target to $18 from $22.50.
MKM downgraded to it to Neutral from Buy and lowered its price target from $21 to $15.
Needham has a Buy rating and lowered its price target to $20 from $25.
Northland Capital has an Outperform rating and lowered its target to $20 from $30.
Stifel lowered its price target to $19 from $23.

Shares of Infinera closed trading at $11.89 on Friday. The stock has a consensus analyst price target of $18.75 and a 52-week trading range of $11.76 to $25.24.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.