Aerohive Networks' Investors Stung By Negative Preannouncement; Shares Plunge

Shares of Aerohive Networks Inc (NYSE: HIVE) plunged 22 percent in the pre-market hours after the company cut its third-quarter revenue/EPS outlook and provided fourth-quarter guidance, which also came in well below expectations.

Goldman Sachs, which has a Neutral rating on the stock, cut its price target to $6 from $7.

Citing a slowdown in the pace of E-rate funding approvals, Aerohive now expects third-quarter revenues of $40 million versus prior guidance of $46 million–$50 million and Goldman Sachs/Street at $49 million/$48 million.

The company also slashed its third-quarter non-GAAP EPS view to ($0.07)–($0.06) from ($0.07)–($0.01) versus Goldman Sachs/Street at ($0.03)/($0.04).

For the fourth quarter, Aerohive guided revenues/non-GAAP EPS of $43 million–$45 million/($0.09)–($0.06) vs. GS at $50 million/$0.00 and Street at $51 million/$0.00.

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The company’s original third-quarter guidance was also below expectations and management had commented on slower E-rate project approvals leading K-12 institutions to abandon requests.

“Without further visibility into K-12 recovery, education spending may not return until mid-2017,” analyst Doug Clark wrote in a note.

As a result of lower revenues, Clark trimmed his FY16/FY17/FY18 non-GAAP EPS forecast to ($0.28) / ($0.09)/ $0.15 from ($0.17) /$0.08 /$0.32.

“We look for further detail on 1) partnership progress, 2) competitive dynamics post industry M&A, and 3) new product adoption, specifically Wave 2 .11ac access points,” Clark added.

Shares of Aerohive closed Thursday’s trading at $5.63. In the pre-market hours Friday, they fell 22.74 percent to $4.35. At last check in Friday's mid-morning, Aerohive was down 6.04 percent $5.29.

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