Goldman Sachs attempts to mislead investors

Investment Analysis Clubs Saul’s Investing Discussions
1

Today Goldman Sachs downgraded Infinera to Sell and set a $19 price target. To justify this, they used a forward PE model of 20, down from their original 27. They also believe there will be short term margin pressures to occur after the new product launches. This is nothing that hasn’t already been factored in by the Infinera management team.

http://seekingalpha.com/news/2765546-infinera-drops-4_5-perc…

What they are misleading the public on is that while in the short term the margin pressures may very well be true, the long term outlook is extremely favorable. Per the analyst at GS, they expect Infinera to:

Double their total addressable market by this time next year
Provide 32% Revenue growth for the year
Provide EPS growth of over 500% for the year

Make no mistake. Goldman is issuing this update on the short term so they can get in now for better pricing. It’s a do it while they can before the next earnings report sets in and the price gets away from them.

The management team at Infinera has been completely transparent with their guidance. Tom Fallon has delivered on that guidance 11 out of the 11 past occasions.

I see no news from Infinera that would suggest a different course of action.

Best,
–Kevin

32 Likes
2

Provide EPS growth of over 500% for the year

Where’d you get EPS growth of 500%? I think the analyst forecasts 69 cents in FY 2015 and 95 cents in FY2016. That would be growth of 38%.

Chris

1 Like
3

Maybe talking calendar year, which would be 11 cents in '14 I think, and 69 this year.
I think the more important point is that GS is bipolar. One month they have great things to say about a company and then they down grade and then upgrade in the next quarter. I think Kevin is right it is just a way to provide short term manipulation of the stock price for reason we can only guess at.
Mike

1 Like
4

I think its for profit

3 Likes