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Mellanox Tanks On Q2 Guide; But ‘Well Ahead’ Of Intel, Broadcom

Mellanox Technologies ( MLNX ) stock dove Thursday on weaker-than-expected Q2 guidance late Wednesday, but analysts say the IBD Leaderboard stock won’t succumb to competition from “large incumbents” Intel ( INTC ) and Apple ( AAPL ) supplier Broadcom ( AVGO ). Summit Research analyst Srini Nandury calls Mellanox stock “the name to own in this space,” talking about the Ethernet and Infiniband markets. But Mellanox stock was down 14% in midday trading on the stock market today , at a two-month low below 48. For Q1, Mellanox reported 81 cents earnings per share ex items on $196.8 million in sales, up a respective 35% and 34%. Both metrics topped the consensus of 14 analysts polled by Thomson Reuters for 75 cents and $191.7 million. IBD take: Mellanox is a big mover today, and the move is down, but it had been doing well. The Q2 guide was Wall Street’s sticking point, Credit Suisse analyst John Pitzer wrote in a research report, though he retained an outperform rating and 60 price target on Mellanox stock. Current-quarter sales guidance for $180 million to $185 million, up 12% at the midpoint, missed Wall Street expectations for $214.6 million, Pitzer wrote. Q1 was Mellanox’s seventh consecutive beat and fourth straight of record quarterly revenue, Piper Jaffray analyst Andrew Nowinski and Summit Research analyst Srini Nandury wrote in separate reports. Nowinski maintained his overweight rating and 65 price target on Mellanox stock. Nandury rates Mellanox stock a buy and also has a 65 price target. Both note Intel’s Omnipath isn’t, so far, holding a candle to Mellanox’s 100-gigabyte/second Infiniband product. Omnipath is also 100GB, but Mellanox is on track to launch 200GB and 400GB products in 2017 and a 1-terabyte/second product early next decade. “Mellanox is seemingly ahead of everybody in the market and is executing flawlessly on the Infiniband road map,” Nandury wrote. He said Mellanox is the only OEM to deliver 25/50/100-Gb Ethernet adapters in addition to switches, “well ahead of Broadcom.” Intel stock was down a fraction and Broadcom stock down 1% midday Wednesday. No. 1 chipmaker Intel, late Tuesday, reported mixed Q1 results on a minimal year-over-year climb in PC sales and announced it would layoff 12,000 in an effort to focus on stronger segments.

Mellanox Tanks On Q2 Guidance, But ‘Well Ahead’ Of Intel, Broadcom

Mellanox Technologies ( MLNX ) stock dove Thursday on weaker-than-expected Q2 guidance late Wednesday, but analysts say the IBD Leaderboard stock won’t succumb to competition from “large incumbents” Intel ( INTC ) and Apple ( AAPL ) supplier Broadcom ( AVGO ). Summit Research analyst Srini Nandury calls Mellanox stock “the name to own in this space,” talking about the Ethernet and Infiniband markets. But Mellanox stock was down 14% in midday trading on the stock market today , at a two-month low below 48. For Q1, Mellanox reported 81 cents earnings per share ex items on $196.8 million in sales, up a respective 35% and 34%. Both metrics topped the consensus of 14 analysts polled by Thomson Reuters for 75 cents and $191.7 million. IBD take: Mellanox is a big mover today, and the move is down, but it had been doing well. The Q2 guide was Wall Street’s sticking point, Credit Suisse analyst John Pitzer wrote in a research report, though he retained an outperform rating and 60 price target on Mellanox stock. Current-quarter sales guidance for $210 million to $215 million, up 30% at the midpoint, was slightly short of Wall Street expectations for $214.6 million, Pitzer wrote. Q1 was Mellanox’s seventh consecutive beat and fourth straight of record quarterly revenue, Piper Jaffray analyst Andrew Nowinski and Summit Research analyst Srini Nandury wrote in separate reports. Nowinski maintained his overweight rating and 65 price target on Mellanox stock. Nandury rates Mellanox stock a buy and also has a 65 price target. Both note Intel’s Omnipath isn’t, so far, holding a candle to Mellanox’s 100-gigabit/second (Gb/s) Infiniband product. Omnipath is also 100 Gb/s, but Mellanox is on track to launch 200-Gb/s and 400-Gb/s products in 2017 and a 1-terabit/second (Tb/s) product early next decade. “Mellanox is seemingly ahead of everybody in the market and is executing flawlessly on the Infiniband road map,” Nandury wrote. He said Mellanox is the only OEM to deliver 25/50/100-Gb Ethernet adapters in addition to switches, “well ahead of Broadcom.” Intel stock was down a fraction and Broadcom stock down 1% midday Wednesday. No. 1 chipmaker Intel, late Tuesday, reported mixed Q1 results on a minimal year-over-year climb in PC sales and announced it would lay off 12,000 in an effort to focus on stronger segments.

Biogen Q1 Earnings Beat Estimates, But Sales Miss; Stock Climbs

Big-cap biotech Biogen ( BIIB ) reported a mixed first quarter Thursday morning, and its depressed stock rose in early trading. Biogen posted Q1 earnings of $4.79 a share excluding one-time items, up 25% from the year-earlier quarter and 32 cents above analysts’ consensus, according to Thomson Reuters. Revenue rose 7% to $2.73 billion, about $20 million below Wall Street’s average estimate. Biogen did not change its full-year guidance of $11.1 billion to $11.4 billion in revenue. The shortfall came mainly in sales of multiple-sclerosis drugs, which is also Biogen’s core business. Oral drug Tecfidera grew 15% to $946 million, about $15 million short of consensus, according to Evercore ISI. Interferon products Avonex and Plegridy together sold $670 million, down 11% from Q1 2015 and more than $50 million below consensus. “The shortfall was increased by $40 million in channel inventory reduction, but also included the effect of further rebates to payers in an increasingly competitive category,” wrote Leerink analyst Geoffrey Porges in a research note. “The company’s reported EPS of $4.79 beat consensus … as the company trimmed their R&D expenses more than anticipated.” Biogen’s competition in MS comes mainly from Novartis ( NVS ) and Sanofi ( SNY ), and it might soon get more competition from Roche ‘s ( RHHBY ) ocrelizumab, which is nearing an FDA filing after performing well in clinical trials. Analyst Max Jacobs of Edison Investment Research was more blunt, calling Biogen’s Q1 “an awful quarter” that will likely bring a guidance reduction down the road. “While operating expense control helped save the quarter from an earnings standpoint, management will likely be under pressure from investors to do something drastic to right the ship,” he wrote in a research note. Biogen stock was nonetheless up 4% in early trading on the stock market today , near 277. It’s still down more than 40% from its lifetime high, hit in March 2015, as the company’s MS franchise first started showing weakness last year.