EQIX belongs to data center and cloud computing concept and was downgraded badly yesterday after the company released a new negative guidance for Q3. The stock plummeted over 30%. Looks like the investors/traders start to cool off on the cloud computing. It does seem to be an overreaction to me so I did a little research on its financial performance and past earning announcement market reactions. BTW, next ER for EQIX is on 10/26/2010.
Analyst certainly don't think the earnings will be too great comparing with previous year. Note here the analyst recommendation is from Yahoo finance's data which may not be immediately updated. What's interesting here is the earning reversal expectation for Q3. If confirmed during the earning release (ER), I assume the stock can have a good run since yesterday's lowered guidance had already destroyed most of good expectations.
If you look at the market reaction on/after ER, still the positive reactions are more often than negative ones.
Despite the lowered guidance on revenue, sales are still increasing and I believe it's what matters for the company. I did look at the operating cash flow and it has been positive for past quarters which is somewhat assuring. Cloud computing may sounds too remote for most companies but it is a inevitable trend in my opinion as people get more and more attached with their mobile devices. Hardcore processing capability is no need to be on your tablet all you need is to send in your query and read the results:)
As far as where the stock will go I put my bet on the upside from now. (today the rebounce is around 6% at the moment)
No comments:
Post a Comment