NEW YORK (TheStreet) -- Fusion-IO (FIO) popped in Thursday trading following a better-than-expected earnings report issued after the bell a day earlier. By mid-morning, shares had soared 12.9% to $10.63.
The big-data solutions company reported a net loss for the December-ended quarter of 6 cents a share, compared to net loss expectations of 10 cents a share according to Yahoo! Finance. Revenue of $94.5 million, though a 21.6% year-over-year decline, beat analysts' expectations by $5.2 million. Total sales jumped nearly 10% from the first quarter's $86.3 million in revenue.
"We delivered 10% revenue growth over the prior quarter while maintaining a healthy gross margin due to a strong mix of enterprise customers in the quarter. We added $19 million in cash during the second quarter, bringing our total of cash and cash equivalents to $244 million. We believe these results underscore a solid foundation from which we can continue to focus on capturing the opportunity flash creates for data center transformation," said chief financial officer Ted Hull in a statement.
The Salt Lake City-based business issued soft guidance for the third quarter, forecasting revenue in-line to slightly up sequentially. Analysts had expected 4% sales growth to $97.85 million for the March-ended quarter.In a report released Thursday, Pacific Crest Securities said it saw encouraging signs of a Fusion turnaround. The analyst firm reiterated its "outperform" rating with a price target of $14. "The March guidance, which indicated revenue would be flat to slightly up from the $94.5 million the company just reported, implies that demand for its PCIe flash cards has begun to stabilize. This implies that revenue should return to growth for the first time in a year. We see revenue stabilization as an encouraging sign that the new management team is executing a turnaround and that the competitive threat over the past year has yet to materially alter Fusion-io's ability to grow the enterprise segment," wrote analysts in the report. Likewise, Oppenheimer kept its "perform" rating on signs of stabilization. "We're encouraged by stabilization and come away incrementally more positive. However, FIO's FY3Q14 gross margin guidance implies a mix-shift toward hyperscale customers without any corresponding revenue uptick, meaning the enterprise/SME drive could be short-lived. Operating loss targets (15%-20%) also suggest losses could persist," wrote analst Ittai Kidron. Credit Suisse allocated an "outperform" rating to Fusion, with a price target of $15. "With the management team reset, ioScale being qualified, the server OEM and ISV channel aligned, and the three distinct market segments -- hyperscale, enterprise and SMB -- showing opportunity, visibility is improving. Executing on new customer wins, channels, customers and a recovery at strategic accounts could all prove meaningful over the next 12 months, in our view," wrote Credit Suisse analysts. TheStreet Ratings team rates FUSION-IO INC as a Sell with a ratings score of D. The team has this to say about their recommendation: "We rate FUSION-IO INC (FIO) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
- You can view the full analysis from the report here: FIO Ratings Report
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
Check Out Our Best Services for Investors
Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
Every recommendation goes through 3 layers of intense scrutinyquantitative, fundamental and technical analysisto maximize profit potential and minimize risk.
Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.