Boston, MA 06/17/2014 (wallstreetpr) – The worry appears to deepen for the fiber-optic network components maker, Finisar Corporation (NASDAQ:FNSR) as the MKM Partners has reduced the company’s estimate of 2015 EPS as well as their price target over the stock.
China Eating Margins
As per the note released by the research firm, the earnings-per-share for the year 2015 is lowered down from $1.75 per share to $1.53 per share. Moreover, the firm has also revised its price target for Finisar Corporation (NASDAQ:FNSR) for the year from $30 to $26 per shares. The revision of the EPS and the price target is in response to the company’s melting gross margin in China. MKM has increased its revenue forecast for the year 2015 by $50 million to $1.35 billion, indicating a 17% increase year-over-year. The research firm expects the EPS for the 2016 at $1.87 per share. Despite lowering down the price target and the EPS forecast, MKM continues to maintain a ‘Buy’ rating on the stock. Furthermore, MKM pointed it out in its note that it expects the China’s gross margin issue to spread to more quarters but see it as a temporary issue. According to the MKM analysts, Finisar should witness a recovery in its gross margins somewhere around the second-half of 2015.
Low Guidance
The company had released its dull fourth quarter results on Thursday, but the disappointing guidance put forth by the company costed it tremendously on the trading session on Friday. Even as the sales did well during the quarter, recording a 26% growth year-over-year, a steep cut of 4% in its gross margin played a spoiler for the company. Resultantly, the company reported lower than expected EPS of $0.36 per share, as against the market consensus of $0.38 per share. Moreover, Finisar Corporation (NASDAQ:FNSR) also slashed down its guidance for the first quarter, with an EPS forecast in between $0.30-$0.34 against the estimates of $0.41 per share. The sales were also guided at around $320-$335 million and gross margins at 32% for the first quarter versus the consensus estimate of $313 million and 36% respectively.
