On Tuesday, BofA Securities adjusted its outlook for SI-BONE Inc. (NASDAQ: SIBN) shares, reducing the price target to $21 from $26 while keeping a Neutral stance on the stock.
The decision follows SI-BONE's inline third fiscal quarter results, which showed sales of approximately $366.5 million. This figure includes a contribution of roughly $90-$95 million from Cloud Light transceivers.
The company's guidance for the fourth fiscal quarter ending in June is set $30 million below the consensus. This shortfall is attributed to a continuous inventory correction in the telecommunications sector, which is expected to present a $40 million quarter-over-quarter headwind.
Additionally, networking export restrictions are likely to have a $10-12 million impact, and product transitions at Cloud Light could lead to another $30 million impact.
The report anticipates that the current weakness will extend into the first fiscal quarter ending in September, with recovery beginning to take shape thereafter.
Management has conveyed a positive outlook for calendar year 2025, suggesting that a $500 million per quarter run-rate is achievable by December based on the anticipated telecom recovery and AI-driven growth in datacom transceivers.
In light of these projections, BofA Securities has revised its earnings per share estimates for calendar years 2024, 2025, and 2026, reducing them by 37%, 13%, and 3% to $0.81, $3.21, and $4.76, respectively.
Despite the adjustments, the firm has maintained its $45 price objective, applying a 14 times price-to-earnings ratio for calendar year 2025. This valuation is an increase from the previous 12 times multiple but remains within the historical range of 9 to 18 times. The firm reiterated its Underperform rating, indicating that it awaits firmer signs of recovery in the company's performance.
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