Clearfield price target lowered to $26 from $38 at Lake Street

Lake Street lowered the firm’s price target on Clearfield to $26 from $38 and keeps a Hold rating on the shares. Clearfield reported better revenue and earnings for Q3, with meaningful outperformance on the bottom line, but its guidance fell well short of estimates, the analyst tells investors in a research note. The firm says the large earnings guide down is primarily a function of the lower revenue and lack of cost absorption, which leads to a softer gross margin. As excess inventory and normal seasonality impact the first half of 2024, even assuming a return to sequential growth in fiscal Q32 and Q3, 2024 is setting up to see a significant decline for Clearfield, contends Lake. It thinks the shares will likely remain range-bound until there is better visibility on when the inventory headwinds will abate.