Weakness Seen in Extreme Networks (EXTR) Estimates: Should You Stay Away? - Tale of the Tape
February 27 2014 - 08:57AM
Zacks
Similar to wise buying decisions, exiting certain
underperformers at the right time helps maximize portfolio returns.
Selling off losers can be difficult, but if both the share price
and estimates are falling, it could be time to get rid of the
security before more losses hit your portfolio.
One such stock that you may want to consider dropping is
Extreme Networks Inc. (EXTR), which has witnessed
a significant price decline in the past four weeks, and it has seen
negative earnings estimate revisions for the current quarter and
the current year. A Zacks Rank #4 (Sell) further confirms
weakness in EXTR.
A key reason for this move has been the negative trend in earnings
estimate revisions. For the full year, we have seen 2 estimates
moving down in the past 30 days, compared with no upward revisions.
This trend has caused the consensus estimate to trend lower, going
from $0.37 a share a month ago to its current level of $0.22.
Also, for the current quarter Extreme Networks has seen 2 downward
estimate revisions versus no revisions in the opposite direction,
dragging the consensus estimate down to a loss of $0.01 a share
from $0.09 over the past 30 days.
The stock also has seen some pretty dismal trading lately, as the
share price has dropped 21.5% in the past month.
So it may not be a good decision to keep this stock in your
portfolio anymore, at least if you don’t have a long time horizon
to wait.
If you are still interested in the technology sector, you may
instead consider some better-ranked stocks including Allot
Communications Ltd. (ALLT), Brocade Communications
Systems, Inc. (BRCD) and Netgear Inc.
(NTGR). All these stocks carry Zacks Rank #2 (Buy) and may be
better selections at this time.
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