Sandvine's 22% Drop Offers Buying Opportunity

Sandvine Corp. (SNVNF.PK) shares were hammered on Friday, falling more than 22% after the company announced less-than-expected fourth quarter and 2008 guidance late Thursday afternoon.

Westwind Partners analyst Kris Thompson considers the sell-off an early Christmas present for investors and reiterated his C$6 price target.

In a note to clients he said:

We predicted this when we initiated coverage on November 21, 2007 and recommended that investors on the sidelines wait for this buying opportunity.

He said his "buy" recommendation is predicated on the view that Sandvine has the opportunity to win some large telco deployments, providing valuable upside to his estimates.

We caution that we expect the telco sales cycle to take longer to execute and to be lower margin business. We would become more bullish in our outlook once additional large contracts are announced.

RBC Capital analyst Steve Arthur, meanwhile, reduced his target from C$7 to C$4.80 and maintained his "sector perform" rating.

In a research note Mr. Arthur wrote:

We had viewed consensus expectations as too aggressive for fiscal 2008, reflecting year-over-year growth of ~60%. This announcement solidifies that view, and given the relatively broad assumptions in the new guidance we continue to believe that some caution is warranted.