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Tintri Inc (NASDAQ:TNTR)'s third quarter results showing a significant downshift in revenue trends and the company's intention to explore strategic options have served to turn Bank of America Merrill Lynch into a bear.
The Analyst
BofA Merrill Lynch analyst Wamsi Mohan downgraded Tintri from Neutral to Underperform and lowered his price target from $7 to $5.
The Thesis
Tintri reported fiscal year 2018 third quarter revenue and bottom line results that missed expectations, Mohan said in a Thursday note. Additionally, the company issued downbeat fourth quarter guidance, impacted by weakness in incremental deals orchestrated by the sales disruption that hurt the company in the previous quarter, and deal pushouts at some customers.
The analyst said the company is unlikely to be able to grow at a 20 percent+ CAGR in the foreseeable future, and therefore would need large capital infusions. He noted that the company is exploring strategic options in the face of tough revenue outlook and potential cash crunch even as it looks to scale back on sales & marketing spend by 20 percent to reduce the magnitude of cash burn.
"However, we estimate that Tintri would need a much larger cash infusion than it has in place for future funding, given the significantly lower cash generation given the revenue deceleration," Mohan said.
Meanwhile, the analyst sees the increase in the purchase of Lifetime at the top 25 customers, and the 59 percent increase in customers spending $1 million+ lifetime-to-date as some positives.
As such, BofA lowered its 2018 revenue estimate from $144 million to $123 million, and increased its loss per share estimate from $3.54 to $3.65.
The Price Action
With the over 12 percent drop triggered by the third quarter results, Tintri shares are down about 34 percent for the year-to-date period.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.
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