After Channel Checks, Oppenheimer Is 'Wary' Of These EMC Headwinds

Loading...
Loading...
In a report published Thursday, Oppenheimer analysts maintained an Outperform rating on
EMC Corp
EMC
, while reducing the price target from $33 to $30. Channel checks indicate several headwinds for the company in the first and second quarters, including competition, European demand and currency pressures. In the report Oppenheimer noted, "Our checks suggest EMC's 1Q15 results are tracking in line or below consensus of $5.78B (-18.0% QoQ). Channels pointed to spots of weakness in Europe and qualitative comments and product specific checks were less robust than the overall view. Overall 28% expected rev. growth and 25% expected a decline." Although the 2Q15 checks suggest growth, there is risk. While being "positive on execution," the channels were not as bullish as they were around the same time in 2014. Since this was the case despite EMC's refreshed portfolio, it reflects "competitive pressures, macro caution, and product transitions in EMC's portfolio," the analysts said. While EMC may not significantly reduce its 2015 guidance as yet, there appears to be "modest sales/margin risk related to the pace of spending, price pressure and fx," the analysts wrote. "We believe a small downward tweak to 2015 guidance could occur to keep EMC's macro exposure on the more conservative side." Channel checks further indicated an "incrementally tougher" competitive environment. The pressure from NetApp was expected, but the competition from HP and Dell has increased. "Nimble and Pure's mindshare also increased, which rarely occurred in our past EMC checks suggesting more pressure on EMC's legacy portfolio," the report added. The analysts expect EMC's shares to be "range-bound" until the company resets its 2015 guidance to reflect fx pressures.
Loading...
Loading...
Posted In: Analyst ColorPrice TargetReiterationAnalyst RatingsOppenheimer
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...