A post-earnings price target cut didn’t do the company any favors.
Wireless networking equipment and solutions specialist Ubiquiti (UI -10.22%) suffered a double-digit drop in its share price on the second trading day of the week. This wasn’t due to any news coming directly from the company; rather, the stock was influenced by an analyst’s latest take. This helped drive Ubiquiti’s price down by over 10% on the day, against the S&P 500 index’s gain of 0.2%.
Time for a price target trim
Well before market open, Barclays‘ Tim Long made a downward adjustment to said price target. He reduced it to $104 per share from his previous level of $108. Not surprisingly, his bearish view of the company hasn’t changed, as he maintained his underweight (i.e., sell) recommendation on Ubiquiti stock.
It wasn’t immediately clear why Long felt compelled to trim his fair value assessment of Ubiquiti. It doesn’t seem coincidental, though, that the move came a mere two trading days after the company unveiled its fiscal fourth-quarter results. The company missed the consensus analyst estimates on both the top and bottom lines.
Investors who like dividends were also likely dismayed by another item: the company’s latest dividend declaration. In its earnings report, it revealed the board of directors has declared that the upcoming quarterly dividend would be $0.60 per share. In a world where dividend-paying companies often raise their payouts at least once per year, Ubiquiti continues to keep its own level. It has paid the same amount since September 2021.
Agree to disagree
Not every pundit is growing dimmer on Ubiquiti. On Monday, boutique research firm BWS Financial actually raised its price target on the stock. And that lift was substantial, at 50% from $160 to $240. The firm maintained its buy recommendation on the company as it did so.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Barclays Plc and Ubiquiti. The Motley Fool has a disclosure policy.
