Needham & Company Downgrades Faro Technologies (FARO) to Hold Amid 'Ugly' Preannouncement

Needham & Company downgraded Faro Technologies (NASDAQ: FARO) from Buy to Hold following Friday's preannouncement of a large Q1 miss.

Analyst James Ricchiuti commented commented, "FARO issued an ugly preannouncement after the close Friday. While mgmt had not given guidance for Q1, FARO said Q1 revenues would be 17-18% below consensus. Revenues are now expected to be down 5% y/o/y vs Street expectations of 16% growth. Currency was an issue in the shortfall, though the bigger factor appears to have been weak demand in Japan, Brazil and certain other markets in the industrial metrology business. 3D scanner unit growth was up 20% y/o/y in Q1. We are reducing our revenue estimates for the balance of 2015 and 2016. While tighter controls on expenses may lessen some of impact on profitability, we now expect EPS to be well below our prior expectations for 2015 and 2016. Given the magnitude of the miss and likelihood that this is more than a one-quarter issue, we lower our rating to Hold from Buy."

The firm is cutting 2015 revenue estimate to $361M from $392M and EPS estimate to $1.34 from $1.90. They are reducing 2016 EPS estimate to $1.95 from $2.50, which assumes 11% revenue growth.

For an analyst ratings summary and ratings history on Faro Technologies click here. For more ratings news on Faro Technologies click here.

Shares of Faro Technologies closed at $62.23 yesterday.

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