Shares of Xyratex Ltd. dropped Thursday after the computer storage products company said it expects fiscal third-quarter results below Wall Street's forecasts and several analysts cut price targets.
The stock fell $1.72, or 9.3 percent, to $16.70 in the morning session.
Xyratex, based in the United Kingdom, said it expects adjusted earnings of 35 to 47 cents per share for the period, far below the 62 cents per share analysts polled by Thomson Financial expect, on average.
The tepid guidance comes after fiscal second-quarter profit beat analysts' expectations.
Robert W. Baird & Co. analyst Jayson Noland said the outlook was likely connected to uncertainty about the storage infrastructure unit. He kept a "Neutral" rating.
"Although we view current valuation as likely attractive long term, we believe risk-reward is balanced in the near term given somewhat increased timing/magnitude earnings uncertainty," Noland said in a note to clients.
He cut his price target to $22 from $24, implying he expects the stock to rise 19 percent over Wednesday's $18.42 close.
Citi Investment Research analyst Paul Mansky kept a "Hold" rating but lowered his own price target to $20 from $22.
"Despite strength in Xyratex's lower-margin systems business, we see no urgency in rushing to the name as this backdrop makes management's guidance for flat storage infrastructure sales ... look increasingly like a stretch and presents risk for further downside (earnings) revisions," Mansky said in a note to clients.
A company representative was not immediately available for comment.
Terms & Conditions
RSS Headlines
Fool UK