Fusion-io Downgraded by Benchmark Co. to Hold (FIO)

Fusion-io (NYSE:FIO) was downgraded by equities researchers at Benchmark Co. from a “buy” rating to a “hold” rating in a research report issued on Thursday, Stock Ratings Network.com reports. They currently have a $13.00 target price on the stock, down from their previous target price of $25.00. Benchmark Co.’s price objective would suggest a potential downside of 12.75% from the company’s current price.

The analysts wrote, “Covering and modeling FIO is tricky task because: 1) the market FIO serves did not exist five years ago, 2) customer concentration has created revenue volatility and 3) the extent to which FIO faces competition is unknown. We now believe FIO is required to significantly lower pricing for ioScale in order to attract hyperscale customers large enough to backfill maturing Apple/Facebook business. This customer/market transition is coming at the cost of gross margin, bringing into question whether the previous model targets of 56%-58% gross margin and 20%-25% operating margin is even achievable. At the same time, new leadership is working to rectify OEM channel conflicts (inconsistent pricing and pre-announcing products ahead of OEM qual’s). Rising NAND flash prices at the 2x node will add pressure to margin until the switch to 2y nanometer flash occurs in 2H FY14. Last, it appears as though the company is finally starting to see some competitors creep into the market (e.g. LSI presumably winning some Facebook business). Considering the culmination of these factors, we are stepping to the sidelines and lowering our rating from Buy to Hold and lowering our price target to $13.”

Other equities research analysts have also recently issued reports about the stock. Analysts at Mizuho downgraded shares of Fusion-io from a “buy” rating to a “neutral” rating in a research note to investors on Thursday. They now have a $13.00 price target on the stock, down previously from $22.00. Separately, analysts at RBC Capital cut their price target on shares of Fusion-io from $19.00 to $16.00 in a research note to investors on Monday, July 15th. They now have a “sector perform” rating on the stock. Finally, analysts at RBC Capital reiterated a “sector perform” rating on shares of Fusion-io in a research note to investors on Monday, July 15th.

One research analyst has rated the stock with a sell rating, eighteen have issued a hold rating and eight have assigned a buy rating to the company. The stock currently has a consensus rating of “Hold” and an average target price of $20.73.

Shares of Fusion-io (NYSE:FIO) opened at 14.90 on Thursday. Fusion-io has a 52 week low of $12.72 and a 52 week high of $32.63. The stock’s 50-day moving average is currently $14.35. The company’s market cap is $1.465 billion.

Fusion-io (NYSE:FIO) last posted its quarterly earnings results on Wednesday, August 7th. The company reported ($0.03) earnings per share for the quarter, meeting the analysts’ consensus estimate of ($0.03). The company had revenue of $106.10 million for the quarter, compared to the consensus estimate of $110.20 million. During the same quarter last year, the company posted $0.09 earnings per share. Fusion-io’s revenue was down .5% compared to the same quarter last year. On average, analysts predict that Fusion-io will post $0.21 earnings per share for the current fiscal year.

Fusion-io Inc (NYSE:FIO) is a provider of datacenter solutions that accelerate databases, virtualization, cloud computing, big data, and the applications that help drive business from the smallest e-tailers to some of the largest data centers, social media leaders, and Fortune Global 500 businesses.

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