Wednesday - A Craig-Hallum analyst has adjusted the stock price target for Calix (NYSE: NYSE:CALX), a provider of cloud and software platforms for broadband service providers, to $41 from the previous target of $48, while still recommending a Buy rating on the stock.
The revision follows Calix's announcement of lowered forward expectations for the second consecutive quarter, which the company attributes to changes in spending patterns among its large customers.
Calix has reported a significant drop in revenue generated by its medium and large customers, with figures falling from $77 million in the fourth quarter of 2023 to $43 million in the first quarter of 2024. The company anticipates a further decline of about 50% sequentially in the second quarter to approximately $20 million.
Despite these challenges, Calix's management remains optimistic, suggesting that the second quarter might represent a low point for the company's top-line results. They anticipate that revenue from medium and large customers, which has now reached what they consider a sustainable level, will eventually return to growth.
The revised stock price target of $41 is based on a 25 times multiple of the firm's 2025 earnings per share (EPS) estimate of $1.63. The analyst also highlighted Calix's financial position, noting that the company holds approximately $3.50 per share in net cash, which equates to around 13% of the current stock price.
This detail underscores the company's solid balance sheet despite the downturn in customer spending that has impacted its revenue projections.
Calix's stock price adjustment reflects the company's recent performance and the analyst's future expectations based on the estimated earnings for 2025. The maintained Buy rating indicates the firm's belief in the potential for Calix's stock value to grow in the long term, despite the near-term challenges it faces.
InvestingPro Insights
As Calix (NYSE: CALX) navigates through its current challenges, real-time metrics from InvestingPro provide a detailed snapshot of the company's financial health and market performance. With a market capitalization of $1.83 billion and a high price-to-earnings (P/E) ratio of 93.26, Calix trades at a premium based on its earnings.
The company's revenue has grown by 8.9% over the last twelve months as of Q1 2024, demonstrating resilience despite a quarterly revenue decline of 9.48%. Moreover, Calix's gross profit margin remains strong at 50.48%, reflecting its ability to maintain profitability in a challenging environment.
Two InvestingPro Tips that are particularly relevant to the article include the fact that management has been aggressively buying back shares, which could signal confidence in the company's future prospects, and that Calix holds more cash than debt on its balance sheet, indicating a solid financial position that could help weather the downturn in customer spending.
For readers looking to delve deeper into Calix's financials and future outlook, there are 15 additional InvestingPro Tips available, including insights on stock volatility, analysts' sales predictions, and trading multiples.
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