The firm said it lowered the technology company's ratings because the company guided to lower sales once again and serial top-line shortfalls.
"The release of [Q3'14 earnings] suggests Riverbed may now be more open to a sale..., [and] we believe the distraction of a strategic review and restructuring further clouds the topline," analysts at Citigroup said. "Serial revenue shortfalls make us less confident about the pace of growth."
A price target of $21 was set for Riverbed Technology, down from $23.
Separately, TheStreet Ratings team rates RIVERBED TECHNOLOGY INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate RIVERBED TECHNOLOGY INC (RVBD) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- RVBD's revenue growth has slightly outpaced the industry average of 4.3%. Since the same quarter one year prior, revenues slightly increased by 5.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 140.9% when compared to the same quarter one year prior, rising from -$16.52 million to $6.77 million.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Communications Equipment industry and the overall market, RIVERBED TECHNOLOGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has declined marginally to $36.73 million or 1.54% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, RIVERBED TECHNOLOGY INC has marginally lower results.
- You can view the full analysis from the report here: RVBD Ratings Report