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D.A. Davidson Reiterates Underperform Rating On Infoblox Ahead Of Q4 Results

D.A. Davidson reiterated its Underperform rating on Infoblox Inc BLOX 0.1% and expects an in–line earnings when the company reports its fourth quarter results on August 31.

The brokerage expects earnings of $0.07 in line with consensus estimate and projects revenue of $85.5 million versus consensus view of $85.2 million. Infoblox had guided fourth quarter adjusted EPS of $0.05-$0.07 on revenue of $82-$86 million.

BLOX has two primary revenue drivers: its traditional DNS, DHCP, and IP Address Management products (DDI), which accounted for 84 percent of revenue last quarter, and its DNS security products, which contributed the remaining 16 percent.

"When the "-A" product refresh cycle stopped at the end of calendar 2015, so did growth in DNS, DHCP, and IP Address Management products. In light of this, we believe the DDI market is likely to generate low to mid single-digit year-over-year growth for the foreseeable future," analyst Mark Kelleher wrote in a note.

"With 84% of revenue from this group, we expect the overall growth headwind to persist for the next several quarters," Kelleher continued.

The analyst noted that the company's competitive position remains weak as indicated by the third quarter results. The takeover speculation by private equity firms has added a premium to the stock.

"Given the lack of visibility to revenue growth and the potential that an actual buy-out does NOT materialize, we are reiterating our UNDERPERFORM rating on BLOX with a price target of $18.00," Kelleher added.

May 2016Cowen & CompanyMaintainsOutperform
May 2016DA DavidsonDowngradesNeutralUnderperform
Dec 2015Stephens & Co.MaintainsOverweight

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