UBS slashes Mellanox price target
Jan 03, 2013 (Globes - McClatchy-Tribune Information Services via COMTEX) --
As predicted by "Globes", after the close of trading on Wall Street yesterday, Mellanox Technologies Ltd. (Nasdaq:MLNX; TASE:MLNX) released a warning that it revenue for the fourth quarter of 2012 would be $119-121 million, compared with earlier guidance of $145-150 million.
Talking to "Globes", Harel Finance analyst Rami Rosen said, "This is a very severe warning, and there is a problem in connection with a certain product line, and hence a financial hold-up. The market looked at three things: the revenue warning, the possibility of lowered guidance for the first quarter, and the question of competition from Intel, which will certainly not be resolved in the next quarter or the one after it."
In a note on Mellanox's revenue warning this morning, UBS cut its price target from $70 to $56, and its fourth quarter 2012 earnings per share estimate from $1.08 to $0.80. UBS retains a "Neutral" recommendation on the stock.
One reason for the revenue warning was a technical problem with cabling. "Management is confident the issue has been solved and new screening procedures are in place," UBS says, adding, "As the cabling problem has been fixed, we have added $15 million to our first quarter estimate, so we are raising first quarter 2013 estimated EPS and revenue from $0.98 on $151 million in revenue to $1.06 on $166 million. We have not altered our second to fourth quarter estimates."
On the Tel Aviv Stock Exchange, Mellanox shares are currently down 17.47 percent, at NIS 189.90.
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