DA Davidson Continues To Look For Signs Nimble Storage Is On Path Towards Profitability

In a report published Friday, DA Davidson analyst Mark Kelleher commented that Nimble Storage, Inc. NMBL continues to operate in a highly competitive environment and faces headwinds from being one of the most aggressive companies in distributing stock compensation.

Nimble Storage is scheduled to report its fourth-quarter results on Thursday after market close. The analyst projected the company will report revenues of $66.0 million and non-GAAP earnings per share of $(0.13), which compares to the Thomson First Call consensus estimate of revenues of $66.6 million and non-GAAP earnings per share of $(0.14) while net income loss estimate of $9.6 million is an increase from the $9.1 million the company lost a year ago.

"Earnings per share remains consistent year-over-year, however, due to the significant increase in shares outstanding (from 65 million to 74 million,)" Kelleher wrote.

Kelleher also added that when the company turns profitable it will use its fully-diluted share count of approximately 92 million, up from the 77 million "basic" shares the company is now using in its earnings per share reporting. The increase is based on the analyst's assumptions that the company will be profitable in 2016 and will use the fully-diluted share count in its earnings per share calculations.

Shares remain Underweight rated with a price target raised to $22 from a previous $21.