Networking company Extreme Networks (NASDAQ: EXTR) plunged in trading after its third-quarter guidance left investors disappointed. The company expects revenues in the range of $200 million to $210 million in the Fiscal third quarter, below consensus estimates of $321 million. In addition, the firm projects to lose between -$0.22 and -$0.17 per share, while analysts were estimating EXTR to report earnings of $0.28 per share.
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In the second quarter, Extreme Networks generated revenues of $296.4 million, a decline of 6.9% year-over-year and below consensus estimates of $303 million. The company reported adjusted earnings of $0.24 per share in Q2 compared to earnings of $0.27 per share in the same period last year. Analysts were forecasting the company to report earnings of $0.25 per share.
Management said the reason for the disappointing outlook was that the networking industry was still in the final stages of exiting COVID-era supply chain constraints. As a result, EXTR’s distributors and partners were reducing inventory purchases. However, the company expects purchases to accelerate in the third quarter and anticipates normalized revenue and earnings in Q4.
What Is the Price Target for EXTR Stock?
Analysts remain cautiously optimistic about EXTR stock with a Moderate Buy consensus rating based on three Buys and four Holds. Over the past year, EXTR stock has slid by more than 7%, and the average EXTR price target of $20.20 implies an upside potential of 21.4% at current levels.
