Wedbush Lowers Extreme Networks Target To $3

According to Wedbush, Extreme Networks (NASDAQ: EXTR) target is lowered to $3 from $3.50.

Wedbush reported that given macro and competitive issues cited in company's pre-announcement, it continues to believe shares of Extreme will perform in line with its coverage universe which keeps it on the sidelines. “The company lowered its FQ3 revenue expectation to $75.5-76.5mn from its original guidance of $82-85mn. Management did not update its EPS guidance. We believe the miss was due to several factors including increased competition in the enterprise market, lengthening sales cycles in North America, a weak spending environment in EMEA, and delayed orders due to a new product transition. As a result of the miss, we think progress on the turnaround including margin targets will take longer than anticipated, and we advise investors to remain on the sidelines until significant signs of execution and improvement in the spending environment emerges. We maintain our NEUTRAL rating and lowering our target to $3 from $3.50 based on our PE analysis. We apply ~10x multiple to our CY2012E cash-adjusted EPS of $0.15, plus $1.55 in cash per share, to arrive at our target. We think a discounted multiple is appropriate as it accounts for the company's lost share, poor track record of execution, and intensifying competitive threats.”

Extreme Networks closed yesterday at $3.39.