Should You Get Rid of Mellanox Technologies (MLNX) Now?


Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

One such stock that you may want to consider dropping is Mellanox Technologies, Ltd. (MLNX), which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year. A Zacks Rank #4 (Sell) further confirms weakness in MLNX.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 4 estimates moving down in the past 30 days, compared with no upward revision. This trend has caused the consensus estimate to trend lower, going from 71 cents a share a month ago to its current level of 19 cents.

Also, for the current quarter, Mellanox has seen 4 downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate down to loss of 16 cents a share from earnings loss of 2 cents over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 13.39% in the past month.

So it may not be a good decision to keep this stock in your portfolio anymore, at least if you don’t have a long time horizon to wait.

If you are still interested in the Electronic Semiconductor sector, you may instead consider some better-ranked stocks including Integrated Device Technology, Inc. (IDTI), Lattice Semiconductor Corporation (LSCC) and O2Micro International Ltd. (OIIM). Among these stocks Integrated Device and Lattice Semiconductor hold a Zacks Rank #1 (Strong Buy) and O2Micro holds a Zacks Rank #2 (Buy).With favorable Zacks Ranks, these stocks may be better selections at this time.

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MELLANOX TECH LTD ORD (MLNX): Free Stock Analysis Report

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