Needham & Company Cut the Price Target of SolarWinds (SWI) Following 2Q15
Needham & Company maintained a Buy rating on SolarWinds (NYSE: SWI), and cut the price target to $52.00 (from $65.00), following 2Q15 results. SWI Reported revenues of $119m, coming in well below $122.6m consensus. $0.52 EPS was reported well above $0.46 consensus.
Scott Zeller commented, "Solarwinds had another disappointing quarter for JuneQ, with a top-line miss that was material – this follows the MarQ which was also a slight revenue miss. At issue is the demand creation engine at SWI, which creates all the “inbounds” to the telesales organization; it is our belief the channels used by SWI may be inconsistent in producing quality leads (confirmed in mgmt. commentary on the call). Solarwinds has gone from “disruptor” with fast growth, to become a “platform” for mid-market, which is slower growing but has impressive operating leverage (EPS was a “beat” in June, and op mgn remains above 40%). Saturation? We are not concerned, following independent checks with competitors in the network monitoring market, and also in the MSP channel. Maintain BUY, lowering target from $65 to $52."
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Shares of SolarWinds closed at $47.05 yesterday.