Analyst Thomas Coler of Dain Rauscher Wessels cut the stock from a "strong-buy aggressive" recommendation to "buy aggressive" on concerns that telecommunications-equipment makers such as Cisco Systems and Nortel Networks will continue to delay orders for the next few quarters.
Ixia shares shed $1.70, or 11 percent, to close at $13.70 in Tuesday's abbreviated trading session.
"The market environment for telecom equipment continues to be difficult heading into 2002, increasing the likelihood that Ixia's largest customers will show reduced order patterns going forward," Coler wrote in a research note. "On a more positive note, Ixia appears to be gaining solid traction with next-generation optical manufactures such as ONI and Tellium."
Coler reiterated his 12-month price target of $20 a share.
In late May, Ixia warned that its second-quarter sales and earnings would fall well short of analysts' estimates, primarily because of slumping orders from its largest customers.
The company told investors to expect sales between $14.5 million and $15.5 million in the quarter ended June 30 and earnings between 2 cents and 3 cents a share.
First Call consensus originally pegged the Calabasas, Calif.-based company for a profit between 9 cents and 10 cents a share.
In its first quarter, Ixia pocketed $9 million, or 14 cents a share, on sales of $28.8 million.
Ixia shares rallied up to an all-time high of $39 a share in January before slumping to a low of $9.94 in April.
All four analyst tracking the stock maintain either a "buy" or "strong buy" recommendation.
Analysts now expect it to earn 3 cents a share in the second quarter and 76 cents a share in fiscal 2001.