MKM Partners downgrades Infinera

Echoing what Pete said, I think it will be a while before street sentiment improves. Another quarter or two, if not 2017, according to MKM Partners.…

MKM Partners analyst Michael Genovese downgraded the stock from Buy to Neutral, while reducing the price target to $15 (from $21).

Genovese explained, “We are downgrading Infinera to Neutral from Buy because the new Metro-focused Transmode acquisition is performing worse than expected. The solid long haul business is no longer enough to justify a Buy rating, in our view, as the company has become a show-me story in Metro 100G. Transmode is doing worse because one of its largest customers has not been making any purchases. Also, we do not sense any change in the time line for Transmode revenues synergies from the incumbent Infinera customer base. This still remains a 2017+ event with only an outside chance of meaningful positive surprise in 2016. Finally, while the recent CloudXpress performance has been strong, management sounds cautious about sequential growth over the next couple of quarters due to competitive entries in the market.”

If I find anything meaningful regarding the big Transmode customer I will do my best to report it. I also welcome your help if anyone would like to take up the task.