Shares of Casa Systems (NASDAQ:CASA), a provider of software solutions to the cable and telecommunications industries, slumped on Friday after the company reported preliminary fourth-quarter results. A steep revenue decline led analysts to slash their price targets on the stock. Casa Systems stock was down about 20% at 11:20 a.m. EST.
Casa Systems expects to report fourth-quarter revenue between $63 million and $69 million. That's down from $118 million in the fourth quarter of 2017. The company believes non-GAAP earnings per share will be in the range of $0.13 to $0.17 for the quarter, down from $1.07 in the prior-year period.
CEO Jerry Guo blamed lower-than-expected spending on hardware by certain multiple-system operators, as well as certification delays for wireless products, as the reasons behind the revenue shortfall. Software sales were healthy, according to Guo, which will allow the company to keep its gross margin above 70% for the quarter.
Following the disappointing preliminary numbers, analysts at Morgan Stanley downgraded Casa Systems from overweight to equal-weight, and slashed their price target from $18 to $11 per share. Analysts at Raymond James also lowered their price target on the stock from $19 to $17, saying that management's credibility with investors has suffered.
Shares of Casa Systems are now down nearly 66% from their 52-week high. The financial metrics will need to start moving in the right direction for the stock to make up some of that last ground.