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Inphi Corporation (NYSE:IPHI) reported fourth-quarter results Wednesday that were largely in-line with the Wall Street consensus, but guided a first-quarter outlook that fell short of expectations.
The Analyst
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Bank Of America Merrill Lynch's Vivek Arya downgraded Inphi Corp. from Neutral to Underperform and decreased the price target from $40 to $21.
The Thesis
Inphi Corp. reported Q4 sales inline with the expectations and beat EPS estimates by 3 cents per share. This wasn't enough to soften the impact of significantly lower Q1 sales guidance. Inphi expects 30-percent lower sales quarter-over-quarter and 36-percent lower sales year-over-year — 21-percent below expectations, Arya said in a note.
BofA's concerns include persistent inventory issues, a lack of concrete orders from customers, lower demand in China, deteriorating prices and the unexpected loss of a second customer for its Colorz data center product.
Given the uncertainty of the company's earnings, Arya said he decided to switch to an EV/S methodology, and his new price target is based on 3 times EV/S. The analyst said he has a downward bias to the company's gross margin; it was guided down for Q1, and Arya said he sees more room for a downside surprise.
The Price Action
Inphi shares were down 15.55 percent at $25.09 at the close Thursday.
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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.