Shares of CalAmp (CAMP) fell sharply in late morning trading after the company reported quarterly results and provided conservative guidance for the next quarter.

EARNINGS AND GUIDANCE: After the market close yesterday, CalAmp reported second quarter adjusted earnings per share of 27c on revenue of $90.5M, in-line with analysts' expectations of 27c for EPS but below the revenue consensus of $92.26M. Looking ahead, CalAmp provided an outlook for the third quarter, guiding for Q3 adjusted EPS in the range of 24c-30c on consolidated revenue in the range of $81M-$87M. Analysts expect the company to report Q3 EPS of 31c on revenue of $95.01M. The guidance excludes CalAmp's Satellite business, which contributed $6.7M of revenue in Q2 and ceased operations at quarter-end, the company said.

MANAGEMENT COMMENTS: Commenting on the quarter, CalAmp president and chief executive officer Michael Burdiek said, "The company continues its rapid pace of innovation, expanding its product portfolio and leadership position in the connected vehicle marketplace. Our pipeline of opportunities is very healthy, and we recently won two significant MRM telematics device customers who are expected to contribute to our long-term growth. Although we have been impacted by tough macro conditions in North America, we continue to invest in market-leading telematics solutions, and we remain optimistic that we will see a pick-up in growth from CalAmp's core businesses and new opportunities emerging through LoJack channels."

STREET RESEARCH: Following the quarterly report, First Analysis analyst Howard Smith downgraded CalAmp to Equal Weight from Overweight and cut his price target on the shares to $16 from $19. The analyst said his firm seeks greater confidence in the growth rate of the company's core mobile resource management, or MRM, business given the breadth and magnitude of current revenue weakness. Smith added that Q3 guidance is not only below analyst consensus but also below the firm's recent reduced expectations. The analyst also said the shares are likely range-bound until CalAmp can show a quarter or two of in-line or better results to build investor confidence in the company's growth profile. On the other hand, Craig-Hallum analyst Anthony J. Stoss kept a Buy rating on CalAmp but lowered his price target on the shares to $19 from $20, saying that "weak print" makes it easy to miss longer term opportunity from two new large MRM customers. The analyst noted that Verizon's (VZ) recent acquisition of Fleetmatics and Telogis added to CalAmp's weakness in MRM sales. Still, Stoss said that his firm looks for stronger quarters going forward as CalAmp's new customers start to ramp and demand returns at existing North American MRM customers. In addition, Canaccord analyst T. Michael Walkley kept a Buy rating and $25 price target on CalAmp, even though the company's results and guidance were below the firm's expectations due to ongoing soft MRM trends in North America. The analyst noted that the company's LoJack acquisition provides a strong brand and channel to drive longer-term growth and that he anticipates several revenue and cost synergies through the LoJack deal. Walkley added that his firm believes the company's Wireless DataCom business is "well positioned" to drive fiscal 2017 and fiscal 2018 sales and earnings growth driven by steady sales to Caterpillar (CAT), ramping international sales, a growing product portfolio, new customer wins, expected growth of higher margin recurring revenue, and LoJack accretion.

PRICE ACTION: Near noon, CalAmp dropped 14.6% to $14.01.