Bank of America Responds to Gigamon's Negative Preliminary Q2 Results; Shares Plummet

After the market close on Tuesday evening Gigamon Inc.

announced preliminary results for the second quarter of 2014 that are below its previously stated guidance. Shares of Gigamon have plummeted over 30 percent in Wednesday morning's pre-market session on the news. In response to this, Bank of America analyst, Tal Liani issued a note downgrading shares of Gigamon from Neutral to Underperform and slashed the price objective from $23 to $11. Liani noted that this is the second time in a row that Gigamon has issued a negative pre-announcement. He then went on to explain that the company's revised numbers suggests lower operating and net margins. With this in mind, Liani lowered his EPS estimates for fiscal 2014 and 2015 from $0.33 and $0.57 to $0.09 and $0.23, respectively. To summarize his view, Liani wrote, "After a weak 1Q, we were waiting for a turnaround in Gigamon's sales execution, but the repeat miss confirms our negative concerns. We believe investors should wait until the company can prove its go-to-market strategy and execution has turned around."