Analysts defend Nimble Storage after guidance miss
The shares of Nimble Storage (NMBL) are falling after the company reported in-line third quarter results but provided fourth quarter guidance that came in below expectations. Two research firms - Susquehanna and Maxim - defended Nimble's stock, with Susquehanna saying that the company could become a takeover target and Maxim maintaining that it is in the midst of a turnaround that is showing signs of traction. Nimble develops flash memory products. RESULTS: Nimble Storage reported a third quarter loss of (18c) per share, versus the consensus outlook of an (18c) per share loss. The company's revenue was also in-line with expectations. However, Nimble said that it expects to report a Q4 loss of (13c-15c) per share, versus the consensus outlook of a (12c) per share loss. "During Q3, we saw strong momentum for our All Flash arrays as our product value proposition resonated strongly with customers and channel partners," said Nimble's CEO, Suresh Vasudevan, on the company's conference call. According to Vasudevan, the company obtained 217 new All Flash Array customers last quarter. ANALYST DEFENSES: Nimble's All-Flash Array product appears to be "gaining traction," and it should become more popular as resellers get more comfortable with it, according to Susquehanna analyst Mehdi Hosseini. Moreover, investors should not overlook the possibility that Nimble could be acquired, Hosseini believes. He kept a $12 price target and a Positive rating on the shares. "Multiple metrics" indicate that Nimble is turning itself around, wrote Maxim analyst Nehal Chokshi. Specifically, the analyst noted that the company's year-over-year bookings growth rose to 23% last quarter, up from 13% in the previous quarter. Additionally, the company's bookings from small and medium businesses increased 7% year-over-year last quarter, up from a 1% drop in the previous two quarters, noted Chokshi. Furthermore, the analyst continues to believe that Nimble is benefiting from Dell's acquisition of EMC, and he noted that Nimble expects its sales and marketing spending to increase more slowly than its revenue in fiscal 2018. Chokshi kept a $12 price target and a Buy rating on the shares. PRICE ACTION: In morning trading, Nimble tumbled nearly 15% to $7.87 per share.