UPDATE: Wedbush Downgraded Netgear and Lowered the PT
In a report published Friday, Wedbush analyst Rohit Chopra downgraded Netgear (NASDAQ: NTGR) from Outperform to Neutral and lowered the PT to $31.
Wedbush noted that Netgear's wireless upgrade cycle and improvement in CBU is “unlikely to materialize in the next few quarters.” Although third quarter results were above estimates, the commercial segment was weak. Reported revenue increased approximately 15 percent YoY, or 1 percent QoQ, above the high end of the guided range. EPS of $0.58 was in-line with consensus, and above Wedbush's estimate.
Fourth quarter guidance fell short below expectations. The faltering guidance is primarily due to competition, Europe, and execution issues. Chopra noted SP's limited visibility and weak demand for commercial storage. Netgear reported guidance for Q4 revenue of $340-$355M, a range below the analyst's $370M estimate and consensus of $369.
Chopra commented, “Our downgrade is predicated on our belief that (1) SP visibility remains limited and will likely take multiple quarters to resolve; (2) the commercial business is again facing challenges, this time from competitive pressures, with reacceleration of growth likely taking several quarters; (3) the retail segment is being negatively impacted by the European macro, lack of SP infrastructure upgrades, slow rollout of 802.11ac clients, limiting customer incentive to upgrade equipment.
Wedbush lowered the PT from $36 to $31 based on their 2014 P/E analysis.
Netgear closed at $32.14 and is currently trading -9.61 percent.
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