Calix is a buy, Roth says

After what he calls “mixed” results, Roth MKM analyst Scott W. Searle has maintained his “Buy” rating on Calix (Calix Stock Quote, Chart, News, Analysts, Financials NYSE:CALX).

On July 22, CALX reported its Q2, 2024 results. The company posted EPS of $0.09 on revenue of $198.1-million.

“CALX reported mixed results (sales at the lower end with EPS at the higher end of guidance), but 2Q24 appears to mark the trough (3Q24 up seq (~1% at the midpoint),” he wrote. “Overall, Managed Services wins continue to accelerate (RPOs up 9% seq) and BEAD momentum is building in 2H24/2025 (now at 20 approved entities), but timing remains fluid pressuring NT sales/EPS estimates.”

In a research update to clients July 23, Searle maintained his “Buy” rating and price target of $44.00 on CALX.

The analyst thinks CALX will post EBITDA of $54.3-million on revenue of $833.2-million in fiscal 2024. He expects those numbers will improve to EBITDA of $92.8-million on a topline of $899.6-million in fiscal 2025.

Searle says he expects the second quarter of 2024 will mark the bottom for CALX, but says don’t expect a rapid ramp.

“2Q24 should mark the bottom, but a conservative ramp expected: CALX is guiding 3Q24 to $198M-204M, up ~1% at the midpoint, below the ROTH and Street consensus of $208M with EPS of $0.05-0.11, slightly below the $0.12 consensus,” he argued. “In general, headwinds appear to have stabilized (Small and Medium customers) as the market awaits the impact of BEAD funding flowing to the marketplace in 2025 (early awards starting in 2H24), consistent
with prior CALX commentary. However, given the fluid timing elements, while management expects a sustained return to seq growth, the company expects its sales progression to be towards the lower end of the 1-5% target range in the near-term. This translates to 2025 y/y sales growth below CALX’s 10-15% target before reaccelerating into 2H25 (with modest BEAD funding impact).”