NEW YORK (AP) -- Shares of Ixia tumbled on Tuesday as the network hardware company said that its second-quarter revenue will likely come in below its prior forecast and miss Wall Street's view.
THE SPARK: On Monday Ixia predicted quarterly revenue between $114 million and $116 million. Previously, the company expected revenue in a range of $119 million to $122 million. Analysts polled by FactSet predict revenue of $120.4 million.
Ixia said that its results were hurt by lower-than-expected revenue from network equipment makers and some service providers as certain big deals were delayed to future quarters and customers extended their review cycles.
Ixia will report its full financial results for the second quarter on July 30.
THE ANALYSIS: Patrick Newton of Stifel Nicolaus lowered Ixia to "Hold" from "Buy" and removed its $21 price target. In a client note, the analyst said that delays by customers are typically not just one quarter. Newton is also concerned about softness among network equipment makers, as it appears to have been broad based. The analyst said this weakness makes him uncertain about when core revenue growth will rebound, and how big of a rebound it will be.
Deutsche Bank's Brian Modoff cut Ixia to "Hold" from "Buy" and trimmed its price target to $17 from $21. The analyst said that the downgrade was due to softer-than-expected demand and the absence of a positive near-term growth catalyst. He remains optimistic about long-term growth drivers such as 4G network expansion and next-generation security.
A representative for Ixia did not immediately respond to an email seeking comment.
SHARE ACTION: Ixia's stock dropped $3.45, or 19.5 percent, to $14.29 in afternoon trading. The shares have traded in a 52-week range of $12.01 to $22.50. For the year to date, the stock is up 4.5 percent.