BMO Capital Downgrades Xtera Communications (XCOM) to Market Perform

BMO Capital downgraded Xtera Communications (NASDAQ: XCOM) from Outperform to Market Perform with a price target of $2.50 (from $6.00).

Analyst Tim Long commented, "We are downgrading our rating on the stock from Outperform to Market Perform. We believe the traction in contract signings, with backlog at $95 million at the end of the March quarter and with another $120 million in committed deals, are proof points of differentiated technology. However, the balance sheet remains an issue, and we have no visibility into the timing, size, and dilution associated with a capital raise. If management is able to raise enough capital in the next month or so, we see a scenario where revenues and gross profit can be better than we model for next fiscal year, which would imply a higher stock price than where we are today. However, we cannot ignore the liquidity concerns, which we believe will keep the stock in a trading range for the near term. We are lowering our revenue and EPS estimates for FY16E and FY17E to $69 million/($1.60) and $100 million/($0.98) from $115 million/($0.75) and $168 million/$0.03, respectively."

For an analyst ratings summary and ratings history on Xtera Communications click here. For more ratings news on Xtera Communications click here.

Shares of Xtera Communications closed at $1.85 yesterday.

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