The firm also cut its price target to $13 from $20 ahead of the company's fiscal 2016 first quarter financial report, due out Monday after the market close.
Needham & Co. also downgraded the company's stock rating, to "hold" from "buy," Barron's reports.
Santa Clara, CA-based Infoblox provides network management solutions, including domain name system security and network control.
The company's operating expenditures are expected to increase during the 2016 fiscal year, as the company boosts marketing for subscription renewals, Deutsch Bank said in an analysts note this morning.
Infoblox is also in the process of transitioning its IP address automation and security business products to subscription based services, which will limit sales growth.
Deutsche Bank also lowered its fiscal 2016 first quarter estimates to earnings of 5 cents per share on revenue of $86.2 million, below the consensus of earnings of 6 cents per share on $87.6 million in revenue.
Last year, Infoblox reported earnings of 5 cents per share on $66.7 million in revenue for the fiscal 2015 first quarter.
So far today, 3.15 million shares of Infoblox have exchanged hands, compared with its average daily volume of 817,035 shares.
Separately, TheStreet Ratings team rates INFOBLOX INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
We rate INFOBLOX INC (BLOX) 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 area that we feel has been the company's primary weakness has been its generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- After a year of stock price fluctuations, the net result is that BLOX's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- 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 Software industry and the overall market, INFOBLOX INC's return on equity significantly trails that of both the industry average and the S&P 500.
- INFOBLOX INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, INFOBLOX INC reported poor results of -$0.48 versus -$0.44 in the prior year. This year, the market expects an improvement in earnings ($0.30 versus -$0.48).
- The gross profit margin for INFOBLOX INC is currently very high, coming in at 78.96%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -5.43% is in-line with the industry average.
- Net operating cash flow has slightly increased to $4.45 million or 3.60% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -8.89%.
- You can view the full analysis from the report here: BLOX
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.