UPDATE: JP Morgan Lowers PT on STEC to $6
J.P. Morgan reiterates its Underweight rating on STEC, Inc. (NASDAQ: STEC) but lowers its December 2012 price target on the stock to $6 from a previous $13 per share on concerns over competitive pressures and uncertain macro outlook.
According to J.P. Morgan, “STEC reported strong Sep-Q results, but the bigger story was the Dec-Q outlook, which came in well below consensus expectations. We expect the large reset to the outlook and lack of near-term catalysts to weigh on the stock in the near to mid term. Competitive pressures are intensifying as customers increasingly dual-source, and we expect incremental competitive risks due to new market entrants, as well as alternative technology approaches over the next 6-18 months. Mid-2012 product transitions could serve as potential remedies, but in the interim, we expect increasing headwinds to the revenue growth, gross margin and earnings profiles.”
STEC closed Tuesday's trading at $11.70.
