Kornit Digital's (KRNT) Q2 results "weaken" the overweight thesis due to an unexpected elongation of the sales cycle, weak consumables growth and a downtick in Apollo machine sales, Morgan Stanley said in a Thursday note.
On Wednesday, Kornit Digital posted Q2 revenue that missed estimates, while earnings per share were higher than analyst expectations. For Q3, the manufacturing company guided revenue of $49 million to $55 million, lower than analyst estimate of $56.7 million.
Noting the earnings, Morgan Stanley said that Kornit's high margin ink & consumables revenue declined year-on-year for the first time in three years as major customers began to draw down inventory to more normalized levels.
Additionally, Morgan Stanley said Kornit's Apollo shipments are tracking below expectations as it is taking longer for the company to penetrate the screen print market which has historically run on analog devices.
The firm maintained its overweight rating on the stock but lowered its price target to $20 from $30.
Price: 14.10, Change: -1.13, Percent Change: -7.42
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