Analysts are weighing in on the data storage company Nimble Storage Inc (NYSE:NMBL) and biotechnology company Aptose Biosciences Inc (NASDAQ:APTO) as shares of both companies fell sharply today, reaching record lows.
Nimble Storage Inc
Nimble Storage saw its shares tank nearly 45% over trading on Friday, after reporting disappointing results for the third quarter of the current fiscal year and and gave a lackluster earnings outlook for the next.
In reaction, BMO Capital analyst Keith Bachman slashed his price target on NMBL to $15 (from $30), while reiterating an Outperform rating, as the stock is trading well below his price target.
Bachman commented, “Our original thesis on Nimble is broken. We had previously assumed (incorrectly) that Nimble’s technology advantage would enable the company to take share in both the midmarket and enterprise, while also gradually growing profits and cash flows. However, we think the challenges of Nimble’s competitors are now engulfing Nimble, in terms of both revenue growth and profits. Moreover, while Nimble envisions improving profitability in 2H FY2017, we are less convinced.”
“Hence, we are moving to our back up thesis. We believe that Nimble could make an interesting take out target for the very same reasons mentioned above. The incumbent storage vendors are seeking growth and could meaningfully improve Nimble’s sales leverage. In addition, Nimble is a lot less expensive than it used to be. Nimble’s gross margins remain 67%, which would be accretive to Nimble’s competitors. Moreover, R&D is only about 22% of revenues, whereas S&M and G&A combined are about 58% of revenues. Further, we believe a large portion of non-R&D spending could be meaningfully reduced or eliminated,” the analyst continued.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Keith Bachman has a total average return of 18.6% and a 62% success rate. Bachman has a -16.1% average return when recommending NMBL, and is ranked #58 out of 3857 analysts.
Out of the 19 analysts polled by TipRanks, 10 rate Nimble Storage Inc stock a Buy, 8 rate the stock a Hold and 1 recommends Sell. With a return potential of 50.9%, the stock’s consensus target price stands at $30.77.
Aptose Biosciences Inc
Aptose Biosciences shares are tumbling nearly 35% following the news that the FDA has placed the company’s Phase 1b trial for APTO-253 on clinical hold following voluntary suspension of dosing and discussions by Aptose, with manufacturing the likely problem.
However, Canaccord analyst John Newman remains positive on the shares, reiterating a Buy rating and a $13 price target, which implies an upside of 145% from current levels.
Newman noted, “Aptose will utilize new CMOs to manufacture fresh batches of cGMP clinical supply, and is not limited by active pharmaceutical ingredient (API) supply. The move could rectify any manufacturing issues, assuming no changes to the manufacturing protocol. Importantly, we do not expect changes to the manufacturing protocol, but if changes are made, Aptose could be required to initiate a new clinical trial. However, we believe that no changes to the manufacturing protocol have been made; rather, Aptose is simply utilizing alternate CMOs.”
According to TipRanks.com, analyst John Newman has a total average return of -2.1% and a 37.4% success rate. Newman has a -2.9% average return when recommending APTO, and is ranked #3348 out of 3857 analysts.