Nimble Storage (NMBL) FQ3 Miss Delays Break-Even Beyond 2016, Piper Jaffray; PT Cut to $20

Nimble Storage (NYSE: NMBL) reported FQ3 results, missing the midpoint of guidance by 7% and no longer expects to reach positive operating income in the January quarter. Management attributed the revenue miss to their decision to constrain investments in favor of reaching this break-even point. However, prior to this quarter, there was no indication that revenue growth was constrained.

Piper Jaffray analyst, Andrew Nowinski, thinks the stock is oversold after falling over 35% after hours. Considering the decline, estimates and valuation have been de-risked so he is maintaining an Overweight rating but reducing the PT to $20 (from $33).

Nimble reported FQ3 revenue of $80.7M vs consensus of $87.5M, the first time in seven quarters Nimble has missed guidance. Gross margin of 66.9% was also below consensus of 67.4%. The lowerthan-expected revenue and gross margin resulted in ($10.8M) of operating income, below guidance of ($6M) to ($5M). As such, EPS was ($0.14) was below guidance of ($0.09) to ($0.08).

In order to reaccelerate growth, management said they are increasing investments in the commercial segment, sustaining the current level of investments in the enterprise segment and then broadening the product portfolio by launching an all-flash array. They expect these actions to result in a rebound in revenue growth and operating leverage in the second half of 2016.

For an analyst ratings summary and ratings history on Nimble Storage click here. For more ratings news on Nimble Storage click here.

Shares of Nimble Storage closed at $20.39 yesterday.

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