Analysts still believe in Mellanox despite lower guidance

Mellanox's fourth quarter guidance has muddied the water for analysts covering the company.

The fourth quarter guidance provided by Mellanox Technologies Ltd. (Nasdaq:MLNX; TASE:MLNX) has muddied the water for analysts covering the company.

At the conference call, following the publication of the financial report, Pacific Crest analyst Brent Bracelin said that 2008 was the last time that Mellanox reported a fourth quarter that was down sequentially, and that the drop continued into the first quarter. He asked whether conditions were different this time.

Mellanox chairman, president and CEO Eyal Waldman replied, "No. I don't think you should read from our third quarter guidance into the first quarter." Mellanox CEO Michael Gray added, "I think the fourth quarter of 2008 was really more of a macroeconomic environment."

Clal Finance analyst Jonathan Kreizman said today, "With expectations in the heavens, the fall appears especially painful," adding that that the guidance was a "blow, not a disaster". He reiterated his "Buy" recommendation and target price of $140 for Mellanox.

DS Brokerage analyst Eran Jacobi says that the fall in Mellanox's share price creates a buy opportunity, and raised his recommendation for the share to "Buy" and his target price to $101 from $80.

Harel Finance analyst Rami Rosen cut his target price for Mellanox to $100, but believes that this is a great time to increase exposure to the share.

Deutsche Bank says that the share's volatility has not changed its thesis for the company, but it cut its target price by 22% to $110.

Barclays Capital analyst Joseph Wolf reiterated his "Outperform" recommendation and target price of $140 for Mellanox, saying that the expectations reflected in the share price were the only reason for its short-term volatility.

Published by Globes [online], Israel business news - - on October 18, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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