Wunderlich Says It's Time For Sonus Networks To 'Find A New Recipe'

Shares of Sonus Networks, Inc. (NASDAQ: SONS) have continued to tumble, after the company on Tuesday slashed its revenue forecast by a third and said it won't receive a number of expected orders.

Wunderlinch downgraded the stock Wednesday morning.

Related Link: Sonus Networks Tumbles 30% On Profit Warning

In a separate report published Monday, analyst Matthew S. Robison had reiterated a Buy rating on the stock, while lowering the price target from $22.00 to $17.00.

On Wednesday, Sonus’ price target was trimmed from $17.00 to $9.50 downgraded from Buy to Hold. The analysts’ preliminary view is that, “despite strong specifications and industry reviews of 7000 series products (high-end), the company is missing the healthy part of the market, which is the enterprise segment. In addition to sustainability of legacy gateway product sales, this brings to question target 7000 applications and market suitability of NET-legacy products that represent most of the company’s enterprise revenue. Also suspect is the effectiveness of the company’s strategy for penetrating mobile networks.”

The report highlights a few key points:

• Revenue came in short by a third.
• Trouble seems to come substantially from big U.S. telcos, and enterprise product sales were not enough.
• They expect a restructuring in the company soon.
• They now expect “moderate profit in seasonally strong 4Q15E and break-even 2016E.”
• They have reduced the price target “to the revenue multiple of lower priced peers.”

Shares of Sonus traded recently at $8.49, down 2.4 percent on the day.