Shares of Acme Packet Inc. touched an all-time low Monday after two analysts cut their ratings, citing the company's guidance for second-quarter earnings below Wall Street's estimates.
The stock fell 47 cents, or 10.2 percent, to $4.15 after setting the $4.05 low earlier in the session.
More than two million shares had traded hands in the morning session, well above the average daily trading volume of about 300,000 shares.
On Thursday the Burlington, Mass., company, which makes security products for computer transactions, said it sees earnings for the period, excluding certain items, between 2 cents to 4 cents per share. Analysts polled by Thomson Financial expect, on average, earnings of 9 cents per share.
JPMorgan analyst Ehud A. Gelblum cut his rating to "Underweight" from "Overweight" and said the SBC market demand could be decelerating faster than he or the company expected.
An SBC, or session border controller, is a device used in some voice-over-Internet networks to control signaling.
"Having scaled to address a much larger SBC opportunity, we believe it could take one to two quarters for Acme to internalize a weaker demand environment and another two to three quarters to realign the business," Gelblum said in a note to clients. "Hence we see low potential for earnings upsides in the coming quarters."
Competition does not appear to be the problem, he said, noting second-quarter gross margin guidance in the 77 percent to 79 percent range.
Piper Jaffray analyst Troy D. Jensen lowered his rating to "Neutral" from "Buy" and slashed his price target to $5 from $11. The new target implies he expects the stock to rise about 8 percent over Thursday's $4.62 close.
"We still like Acme Packet from a long-term perspective, but believe telecommunications weakness and lack of near-term catalysts could limit upside potential," Jensen said in a note to clients.
So far this year, shares are down about 63 percent.
A company representative was not immediately available for comment.
Terms & Conditions
RSS Headlines
Fool UK