Cloudera Issues Weak Guidance; Deutsche Bank Downgrades On Risk Of 'Demand Shift'

Cloudera Inc (NYSE: CLDR) reported better-than-expected fourth-quarter results after the close Tuesday, but issued weak guidance for the first quarter of 2019 as well as the full fiscal year. 

The stock reacted to the sour guidance with a steep move to the downside.

The Analyst

Reviewing the results, Deutsche Bank analyst Karl Keirstead downgraded shares of Cloudera from Buy to Hold and reduced the price target from $23 to $18, suggesting 19-percent downside from current levels.

The Thesis

Following two strong quarters that led to a rally in Cloudera shares over the past four to five months, the company issued below-consensus guidance due to a Q4 bookings miss and pending field sales changes, Keirstead said in a note. (See the analyst's track record here.) 

Although Cloudera attributed the predicament to reps being "too focused on new logos and not expansion opportunities," Deutsche Bank downgraded the company on the risk that it's in fact undergoing "an end market or demand shift that will take more time to recover from," according to Deutsche Bank.

The Price Action

Cloudera shares had gained about 23 percent over the past year through Tuesday.

The stock was plunging 37.28 percent at the time of publication Wednesday morning. 

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