Why Allot Communications Dropped a Lot

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Allot Communications (NASDAQ: ALLT  ) dropped a lot today, down by as much as 26%, after an analyst downgraded the stock.

So what: Oppenheimer cut its rating on Allot from outperform to perform, expressing a belief that the business was slowing down and that a fourth quarter miss could be in store for investors. The company may be facing headwinds in Europe and order activity may have weakened based on the analyst's checks.

Now what: Allot's book-to-bill may fall below 1, and the analyst expects sales to come in at $28.6 million with net income of $5 million. The consensus estimate calls for a top line of over $31 million in sales and a bottom-line profit of $5.5 million. Losing over 25% of its value on one analyst opinion may seem a bit excessive, but big swings are par for the course when you're talking about a small cap company valued at just $440 million and trading at over 36 times earnings.

Interested in more info on Allot Communications? Add it to your watchlist by clicking here.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2177948, ~/Articles/ArticleHandler.aspx, 3/26/2015 3:35:06 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!