Needham stays bullish on Calix despite ‘meaningful reset’

Needham says Calix reported inline Q4 revenue with a strong earnings beat, but guided Q1 meaningfully below consensus. The firm is surprised by the magnitude of the guide-down, and waits for management commentary on this morning’s earnings call before adjusting estimates. Despite the disappointment Needham remains bullish on Calix citing its strong recent execution, consistent gross margin expansion, and the “sizable” competitive lead in its transformation to a software company. Following the “meaningful reset” to 2024 growth, the firm expects Calix to return to delivering strong growth in 2025, driven by significant new capital, including federal subsidies, funding a “massive” U.S. rural fiber build over the next five years, the analyst tells investors in a research note. Needham has a Buy rating on the shares with a $55 price target.