KRNT - Kornit plunges 23% after pre-announcing weak Q2 results Citi slashes price target

Kornit ( NASDAQ: KRNT ) plunged 23% on Wednesday after the Israeli e-commerce company preliminarily released its second-quarter results early, which were well below expectations.

Citi analyst Jim Suva, who has a buy rating on Kornit ( KRNT ) shares, noted that the shortfall was due to the fact hardware sales "drastically" slowed late in the quarter as customers delayed plant expansions, as well as higher funding costs for equipment due to higher interest rates and softer t-shirt sales.

"We maintain our Buy rating as we believe the bad news is now announced and digital fabric printing remains in infancy stage of adoption," Suva wrote in a note to clients, while also slashing the firm's price target to $50 from $90.

On Tuesday, Kornit ( KRNT ) said it expects second-quarter revenue to be between $56.4M and $59.4M, well below the company's previous guidance of $85-$95M and below analysts' estimates of $88.53M.

Adjusted operating margin for the period is expected to be between -34% and -28%, with adjusted EBITDA margin between -30% and -24%, including the 10% impact of a non-cash warrant.

Kornit ( KRNT ), which will release its full second-quarter results on August 10, added that it expects third-quarter revenue to be at or above second-quarter results.

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