Analyst Believes Mellanox Outlook 'Should Provide Relief,' Sees 'Story Intact'

• Mellanox Technologies, Ltd. MLNX shares are down 11 percent year-to-date, trading below the $45 mark since July 27.
• Summit Research’s Srini Nandury maintained a Buy rating for the company and a price target of $65.
• Nandury expects Mellanox’s press release stating an increase in its revenue guidance to allay investor concerns over the company missing revenue expectations.

Analyst Srini Nandury said that Mellanox had issued a press release in which it has raised its F3Q revenue guidance from $165-$170 million to $169-$171 million.

The company has guided to an increase in operating expenses, while not providing details of the amount or the reasons. Nandury commented, “While the operating expenses above guidance could be open to interpretation, we believe investors will like that the company did well on the revenue line.”

Mellanox is scheduled to report its F3Q results on October 21. Mellanox’s shares have recently been under pressure amid fears that the company’s revenues may miss expectations. “This new news will assure investors that the story is still intact and MLNX is one of the better names in HW today,” Nandury wrote.

With its latest EZchip acquisition, Mellanox continues to “diversify away its dependence on HPC sector,” Nandury added.