Mellanox stock down for two days running, 8.3 percent fall on Monday

Mellanox is in hard water this time around. For the second consecutive day, the shares were down because of possible slow growth in the coming days and the departure of its chief financial officer.

The company had been running a hot streak since last year and its share price was up more than 200 percent until Friday last week when Stifel Nicolaus analyst Kevin Cassidy downgraded its rating from buy to hold.

The shares were down 9 percent on Friday after the update in rating and further took a dip 8.3 percent on Monday after the company announced that its CFO will be resigning in November.

The official statement said Michael Gray will tender his resignation on November 5 but he has no plans to join another company in the same capacity. That vaguely means a retirement. Mellanox further asserted that Gray will keep the office until February next year.

The board has approved of Jacob Shulman as the next person to take charge as the CFO and Mellanox claims that it is all a planned move. However, such a resignation or retirement is never taken in a productive way. A CFO change is quite a setback for investors even it is a planned move.

“The company announced a CFO change and people always get concerned when that happens,” said Lazard Capital Markets analyst Daniel Amir. “Investors sell first and ask questions later.”

Maxim Group analyst Ashok Kumar, on the other hand, has another opinion on the share price downfall. According to him investors are churning profits from exponentially increasing market value of the stock.

“Valuations are at the upper end of historical levels and that prompted some investors to take some money off the table,” Kumar said. “But … we’re seeing increased adoption of the company’s InfiniBand technology.”

Analysts expect Mellanox to earn $1.13 a share ex items on sales of $153.1 million in the third fiscal quarter. That is 265% increase on EPS and 125% on expected sales.

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Posted by Usman Khalid on Sep 13 2012. Filed under Sci-Tech. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.