Needham & Company Remains Bullish on Ikanos Communications (IKAN) While Lowering Price Target

Needham & Company maintained a Buy rating on Ikanos Communications (NASDAQ: IKAN) and lowers price target to $5 (from $6.50) after 1Q15 results came in slightly below expectations. IKAN reported revenue of $10.2M which was within the guided range of $10-12M but below the estimate of $11m. But with two new gateway design wins announced, Needham expects a good 4Q15

Needham analyst Quinn Bolton comments, "Fundamentally, we believe IKAN remains in a period of transition as the company invests in its new ultra-broadband and diagnostic software solutions. We continue to be encouraged by design win momentum across its Vx gateway processor families and by field trials at two customers for Velocity-3. Field trials at a carrier customer for inSIGHT are expected to conclude in 2Q15, with anticipated deployment by the end of 2015. We continue to believe that IKAN's IP, together with its collaboration with Alcatel-Lucent, warrant a higher valuation for IKAN shares. We maintain our Buy rating for patient investors but lower our PT to $5, reflecting a lower revenue forecast.

The analyst added, "IKAN announced two new design wins for their gateway product family during 1Q15, one of which is a DSL/LTE product hybrid using the VX185 gateway chipset. Management expects these design wins to ramp in 4Q15."

The firm lowerd FY 2015 EPS from ($1.75) to ($2.46) and FY 2016 EPS from ($0.76) to ($1.21).

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

Shares of Ikanos Communications closed at $2.75 yesterday.

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