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Summit Research Upgrades QLogic (QLGC) to Buy

October 17, 2014 6:35 AM EDT
Get Alerts QLGC Hot Sheet
Price: $16.07 --0%

Rating Summary:
    5 Buy, 11 Hold, 3 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
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Summit Research upgraded QLogic (NASDAQ: QLGC) from Hold to Buy with a price target of $14.00 (from $12.00) following better than expected results.

Analyst Srini Nandury comments, "We believe QLGC will continue to outperform in the near-term (four to six quarters) driven by Grantley, share buybacks (a new $100mln share buy-back program authorized) and solid execution. Last quarter, we noted that we were warming up to the new management and we were looking for solid execution, which is just what the company delivered. FC outlook seems to be improving at least in the near-term (and 6th Gen FC is on the horizon), despite a constant drum roll of imminent death of the standard from big and small competitors. We do not believe Ethernet is ready to replace FC in the enterprise, as of now. We expect FC to return to growth as enterprises upgrade their servers, and we believe the attach rates for 16GFC will likely be in the high 70s ( and that's a conservative estimate), given that Grantley servers need high bandwidth and throughput that Fibre Channel can deliver. Similarly, we also expect QLGC's Ethernet revenue to grow faster than the market given that enterprises/Web2.0 and Cloud service providers will need the 10GigE capabilities to fully utilize their new Grantley servers. Therefore, we are raising our estimates modestly and increase our PT to $14 (up from our prior $12) based on 12.0x on C2015 EPS of $1.16."

For an analyst ratings summary and ratings history on QLogic click here. For more ratings news on QLogic click here.

Shares of QLogic closed at $9.55 yesterday.



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