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Infoblox -9.5% on pre-earnings Deutsche and Needham downgrades

Nov. 24, 2015 8:28 AM ETInfoblox Inc. (BLOX-OLD) StockBLOX-OLDBy: Eric Jhonsa, SA News Editor
  • Deutsche's Vijay Bhagavath has downgraded Infoblox (NYSE:BLOX) to Sell ahead of its Nov. 30 FQ1 report, and cut his target by $7 to $13. Needham's Alex Henderson has downgraded to Hold.
  • Bhagavath expects "an inline to slightly light report," but has cut his FY16 and FY17 estimates. "Basis for our underweight thesis is our research noting: 1) Sunsetting of the “-A” refresh cycle by Dec/15 (currently driving +10% of product growth) likely to mute product refresh trends in 2016; 2) Transition of BLOX’s IP Address Automation and Security business to a SaaS model “deflationary” to FY16+ topline growth; 3) Migration to Public Clouds structurally compressing the [addressable market] for BLOX’s products."
  • Henderson, who upgraded to Buy a year ago (when shares were at $16.34), is worried about sales turnover and product refresh timing issues. "While we believe the long- term prospects for BLOX are good and we see a real need for its technology, these products are still sold and must be marketed. BLOX likely needs the better part of CY16 to rebuild its sales efforts. We expect solid Oct and Jan quarters but see real risk to down 1H16 numbers." His calendar 2016 revenue and EPS estimates have respectively been cut to $386M and $0.34 from $419M and $0.38.
  • Infoblox has fallen to $14.25 premarket.

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