(Adds details from analyst notes, updates share price)
May 30 Shares of Infoblox Inc slumped
41 percent to their life low on Friday, a day after the network
equipment maker warned of a lower-than-expected profit for the
fourth quarter, hurt by contract delays and a slowdown in
At least five brokerages lowered their rating and eight cut
their price target on Infoblox's stock, citing uncertainty
around the company's new sales strategy as IT customers
prioritized spending on network security over automation.
Analysts also highlighted concerns that any turnaround in
Infoblox's fortunes, which could last more than a year, would
not be led by its chief executive of nearly 10 years, Robert
Thomas, who said on Thursday that he would step down.
More than $450 million was wiped off the company's market
value when the stock hit a life-low of $12.165 on Friday. The
lowest target price set on the stock was $14.50, by D.A.
Davidson, by midday Friday.
"With the sales effort in transition, and a slowing of
growth in the general IP address management market in favor of
other IT priorities, we believe it will be several quarters
until a strong revenue growth path re-materializes for BLOX,"
D.A. Davidson's Mark Kelleher wrote in a note.
The brokerage had a "neutral" rating on the stock, similar
to most other brokerages. No brokerage had a "sell" rating.
Infoblox said on Thursday it expected to break even or earn
up to 2 cents per share on an adjusted basis in the quarter
ending July. Analysts on average were expecting 6 cents per
share, according to Thomson Reuters I/B/E/S.
Pacific Crest's Brent Bracelin said there was no "quick and
easy fix" for the slowdown in orders that began last October.
Wedbush Securities analyst Sanjit Singh said a turnaround
could take anything between three to six quarters as Infoblox
could take up to nine months to book revenue from a sale.
Analysts also raised concerns as to how the company would
navigate the competitive network automation market after CEO
Thomas left. Infoblox did not say when Thomas would step down.
"Perhaps the most disappointing development was CEO
Robert Thomas announcing his resignation," UBS said.
Shares of Infoblox have fallen about 38 percent this year to
Thursday's close of $20.52. At that price the stock was more
than three times it worth, according to StarMine's intrinsic
valuation model, which takes analysts' five-year estimates and
models the growth trajectory over a longer period of time.
The stock is also expensive. At Thursday's close, Infoblox
traded at 59.9 times forward earnings, higher than an sector
median of 18.4 times, according to Thomson Reuters StarMine.
(Reporting By Lehar Maan in Bangalore; Editing by Savio