Monday, December 6, 2010

Mitel's (NASDAQ:MITL) Growth Profile May Start to be Questioned

Although there are no certainties at this time as to Mitel's (NASDAQ:MITL) reason for continuing to underperform, it could be demand in the SMB market, but it's not for sure, and some investors may start to question the growth profile of the company.

UBS (NYSE:UBS) said, "Mitel's 3Q outlook was disappointing expecting sales of $157-$162M vs. Street expectations for - $162M. We believe the disappointing outlook is partly due to weak demand in the SMB market, however, some investors may begin to question Mitel’s growth profile with - 7 qtrs of flattish revs as some others have recovered...We now lower our estimates for CY10 and CY11 sales and EPS ex options to $645M (-2%) and $0.73 and $674M (+5%) and $0.83 versus our prior $650M (-1%) and $0.81 and $705M (+8%) and $0.94. 2Q sales and EPS ex options of $161M and $0.16 were below our forecast of $162M and $0.18."

Mitel closed Friday at $5.68, down by $0.72, or 11.25 percent. UBS lowered their price target on them from $7 to $6.50. Volume was about 8 times the normal 3-month daily average.

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