NEW YORK (AP) -- Shares of Synnex declined in afternoon trading on Thursday as the high-tech contractor forecast fiscal second-quarter earnings below Wall Street's expectations.
THE SPARK: Synnex Corp. said late Wednesday it expects second-quarter earnings in a range of 78 cents to 82 cents per share on revenue between approximately $2.43 billion and $2.53 billion. Analysts polled by FactSet expect earnings of 92 cents per share on revenue of $2.5 billion.
The company also reported first-quarter earnings of 88 cents per share on revenue of $2.46 billion. Wall Street forecast earnings of 88 cents per share on revenue of $2.44 billion.
THE ANALYSIS: Matthew Sheerin of Stifel Nicolaus said in a client note that Synnex's second-quarter earnings guidance came in below estimates due to increased pricing pressure and softer demand for larger-volume products like printers and notebook/desktop personal computers. The analyst said the company is also dealing with weakening demand in Canada, which makes up about 15 percent of its sales.
Sheerin reaffirmed a "Hold" rating.
Brean Capital's Ananda Baruah continues to like Synnex despite the soft second-quarter earnings outlook. The analyst said that Synnex plans to defend share in the high-volume print and PC categories, with history showing that competitive pricing pressure in these areas is typically short lived.
Baruah said the company's balance sheet is still solid and views it as an attractive long-term opportunity. The analyst maintained a "Buy" rating and increased Synnex's price target to $43 from $40.
Synnex CEO Kevin Murai said during a conference call on Wednesday that the company is optimistic about its competitive position and business strategy and believes it is well positioned to grow sales and profitability over the long term.
SHARE ACTION: Synnex Corp.'s stock fell $4.08, or 10 percent, to $36.80. The shares have traded in a 52-week range of $30.70 to $41.22. For the year to date, the shares are up about 19 percent.