Market Overview

Inphi Corp.'s Lower Q1 Guidance Triggers BofA Downgrade

Inphi Corp.'s Lower Q1 Guidance Triggers BofA Downgrade

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

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. 

Related Links: 

45 Stocks Moving In Thursday's Mid-Day Session 

Morgan Stanley's Conviction In Upside For Inphi Limited 

Latest Ratings for IPHI

Aug 2020Morgan StanleyMaintainsOverweight
Aug 2020Northland Capital MarketsUpgradesUnderperformMarket Perform
Aug 2020Deutsche BankMaintainsBuy

View More Analyst Ratings for IPHI
View the Latest Analyst Ratings


Related Articles (IPHI)

View Comments and Join the Discussion!

Posted-In: Bank of America Merrill Lynch Data Center Vivek AryaAnalyst Color Downgrades Price Target Analyst Ratings

Latest Ratings

UBERRBC CapitalMaintains50.0
WIXJMP SecuritiesMaintains363.0
CVIJP MorganInitiates Coverage On22.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at