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Why Acacia Communications Stock Fell after 4Q17 Results

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Feb. 26 2018, Updated 8:26 a.m. ET

ACIA stock fell 11.5% on February 23, 2018

In this series, we’ll be looking at the top tech (technology) gainers and losers on February 23, 2018.

Acacia Communications (ACIA) stock fell 11.5% to close at $37.05 on February 23, 2018. It announced its 4Q17 results on February 22, reporting revenue of $86.6 million, a fall of almost 40% YoY (year-over-year), with EPS (earnings per share) of $0.27. The average analyst revenue estimate for ACIA was $88.4 million with an EPS estimate of $0.25. ACIA reported EPS of $0.94 in 4Q16.

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During ACIA’s earnings call, CEO (chief executive officer) Raj Shanmugaraj stated, “While we continue to face some headwinds in the market, our fourth quarter 2017 results were in-line with our expectations.” In fiscal 1Q18, the company expects to post revenue between $67 million and $74 million, which is far below the average analyst estimate of $93 million. CFO (chief financial officer) John Gavin said market conditions improved toward the end of 2017, but the company has maintained a cautious outlook for 1Q18.

Morgan Stanley lowered its price target to $37

Investment bank Morgan Stanley (MS) has reduced its 12-month price target for Acacia to $37 from $40 and maintained an “equal-weight” rating on the stock. That came after revenue for 2017 fell 19.5% year-over-year to $385.2 million. ACIA’s revenue fell year-over-year in three of its major markets, including China (FXI), telecom (telecommunications), and hyperscale. Analysts expect revenue growth of 28.3% in 2Q18, 11.8% in fiscal 2018, and 21.6% in fiscal 2019.

The other tech losers on February 23, 2018, were Pandora Media (P) and GrubHub (GRUB), which fell 4.6% and 1.6%, respectively.

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