Northland downgrades Calix to Market Perform on gross margin headwinds

As previously reported, Northland downgraded Calix (CALX) to Market Perform from Outperform with a price target of $52, down from $75, following a Q1 report and outlook that “featured a range of moving parts.” A meaningful step-down in gross margins is being driven by much greater than expected memory cost pressure, despite reduced pressure from dual cloud costs, the analyst tells investors in a post-earnings note. The company guided Q2 revenue to $290M at the middle of the range, up 4% sequentially and 20% year-over-year, but with gross margins guided down 150 basis points on the memory cost issues, the analyst noted.