NEW YORK (TheStreet) -- Shares of Infinera(INFN) - Get Report are falling 33.65% to $8.30 on heavy trading volume this morning after the company reported better-than-expected 2016 second quarter earnings yesterday after the closing bell but warned that demand for its products may be "softening."
Almost 10.5 million shares of the stock have traded so far today, vs. the average of 2.65 million per day.
The Sunnyvale, CA-based fiber-optic networking equipment company reported earnings of 21 cents per share yesterday, beating estimates of 18 cents. Non-GAAP revenue for the quarter was $259 million, above Wall Street's $256 million consensus.
In a conference call, CEO Tom Fallon said that for the upcoming quarter there "are concerning signs of slowing demand in the primary markets [Infinera] serves." The company has struggled to win "long-haul" opportunities as many larger customers have been building out their own footprints.
Following the report, analysts at JPMorgan downgraded the stock to "neutral" from "overweight," and cut their price target on the stock to $8.50 from $19 in a note cited by Barron's.
While part of the downgrade and price target decrease is due to post-Brexit concerns, JPMorgan added that the company may see challenges from "excess inventory at large customers" in the upcoming quarter.
"We continue to see potential for Infinera but are sidelined until business visibility improves," the firm said.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "hold" with a ratings score of C+.
The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, TheStreet Ratings also finds weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and unimpressive growth in net income.
You can view the full analysis from the report here: INFN