Fusion-IO (FIO)

[eastunder]

Da Horror? Da Lumpiness!

Lazard Cuts PT on Fusion-io (FIO) to $14; Disastrous Results Don't Unseat Fundamentals

http://www.streetinsider.com/13Gs/Lazard+Cuts+PT+on+Fusion-io+%28FIO%29+to+%2414%3B+Disastrous+Results+Dont+Unseat+Fundamentals/8807949.html

Lazard Capital cuts its price target on Fusion-io (NYSE: FIO) from $17 down to $14 while maintaining a Buy rating on the stock following Q1 results.

After markets close on Wednesday, Fusion-io posted Q1 loss of 7 cents per share on revenue of $86.3 million, from expectations looking for a loss of 11 cents per share and sales of $84.7 million.

Lazard analyst Edward Parker commented, “While we concede that headline numbers have been disastrous and continue to move in the wrong direction, we believe the reason stems from a combination of organizational transition and concentrated customer lumpiness, two issues that are ultimately manageable. There's a strong technology story here that continues to be levered to rapidly growing end markets but is being dragged down by lumpiness.”

After Fusion-io pulled guidance, Parker cut his outlook for FY14 from 20 percent growth to 12 percent negative growth. He explained, “Management maintains that relationships are strong and they aren't losing customers. Whether this is completely accurate or not will require some investigation, but we haven't come across compelling evidence that widespread competitive displacements are occurring.” Notably, Apple (Nasdaq: AAPL) and Facebook (Nasdaq: FB) were about half of Fusion-io's revenues in calendar 2012, which is skewing comparisons.

While the company has issued a few missteps over the last several quarters, Parker doesn't see enough evidence that competition is squeezing Fusion-io or that an unfavorable secular change is happening.

It's all about the lumpiness. ;)