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UPDATE: J.P. Morgan Downgrades Violin Memory Following Deterioration Of Revenue Model

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In a report published Friday, J.P. Morgan analyst Mark Moskowitz downgraded Violin memory (NYSE: VMEM) from an Overweight rating to a Neutral rating, lowering the price target from $9.00 to $5.50.

In the report, J.P. Morgan says "We are downgrading Violin Memory to Neutral from Overweight and lowering our Dec 2014 price target to $5.50, down from $9. This “show me story” just got a lot tougher. In our October 22 initiation report, we highlighted Violin as a high risk, high-reward stock, and we think the pendulum has titled more toward high risk. We had previewed that Violin had to cross the 50%-threshold for both YoY revenue growth and gross margin. While gross margin was a bright spot, the deterioration in the revenue model is severe, resulting in our F2015 revenue estimate falling by 33% versus prior estimate. This deterioration is too big to support a constructive stance on the stock, particularly as market and company specific factors could limit any near-term revival in Violin's growth profile."

Violin Memory closed on Thursday at $6.00.

Posted-In: J.P. Morgan Mark MoskowitzAnalyst Color Downgrades Analyst Ratings

 

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