FBN Securities Inc. slashed its price target on Fusion-io Inc.
(NYSE:FIO) to $26 from $29, saying margin concerns will keep a lid on
the data-centric computing services provider in near term.
Shebly Seyrafi, an analyst at FBN retains his "Sector Perform" rating
on the stock and said the company's margin forecast is worse than he
had previously modeled.
The company's second-quarter gross margin shrank to 51.0 percent from
58.7 percent a year ago and 63.3 percent sequentially. FIO guided third
quarter non-GAAP gross margin to be in the range of 50 percent.
Seyrafi said FIO's margins are being negatively impacted by
"webscale" customers (think Facebook) buying lower margin products and
by the recent move to purchasing next-generation (2x nm) NAND which has
higher initial costs.
"With EMC expected to launch Project Lightning (its server-side flash
cache) shortly and increasing competition in PCI-e SSDs from OCZ and
others, we still do not believe this is the time to buy FIO," Seyrafi
wrote in a note.
A bright spot is the company's announced win of Salesforce.com (NASDAQ: CRM), a fast-growing SAAS vendor, he added.
Shares
of the Salt Lake City, Utah-based company tumbled 18.7 percent to
$24.65 in early trade on Wednesday. The stock has been trading in the
52-week range between $14.90 and $41.74.
