UPDATE: Deutsche Bank Downgrades Violin Memory to Hold, Lowers PT Following Sour Notes

In a report published Friday, Deutsche Bank analyst Chris Whitmore downgraded the rating on

from Buy to Hold, and lowered the price target from $10.00 to $3.50. In the report, Deutsche Bank noted, “VMEM revs totaled $28.3M (vs. Street at $31.7M) & attributed weakness to Fed. 4Q guidance disappointed at ~$31M (vs. Street at $47M) as the Fed, core array business & PCIe missed previous expectations. VMEM is burning ~$27m per Q in FCF & hasn't articulated a plan to reduce it. With a current cash balance of ~$134m, it suggests VMEM can survive ~5 Qs at its current burn rate. Poor execution as a new public company & its high cash burn rate challenge mgmt's credibility with investors, its ability to raise add'l capital & VMEM's multiple will compress on substantially lowered expectations. We cut est's and the rating to ‘Hold' and PT to $3.50 (or 2.5x CY14 EV/revs).” Violin Memory closed on Thursday at $6.00.