EMC Corp. (NYSE: EMC) is the world’s leader in storage products, particularly for enterprises. The problem is that the proliferation of the cloud brings as much threat as it does opportunity, because storage is perceived to be on its to becoming ubiquitous at a time when dozens or hundreds of competitors can come on to the scene with cheaper offerings.
Good news may be on the way for EMC doubters. After the company’s own EMC World event, we have seen two analysts defend EMC. Sterne Agee maintained its Buy rating and $30 price target. Credit Suisse maintained its Outperform rating and $30 price target.
Sterna Agee’s take is that there was not enough to drive near-term change in investor sentiment after first day keynotes and the analyst meeting, but also EMC is clearly taking a more aggressive approach with new products (like ECS) to address longer-term competitive threats. The $30 price target is based solely on 13 times this year’s earnings expectation, with a $22 downside target and $33 upside target.
Credit Suisse remains confident on EMC’s revenue growth reacceleration in the second half of this year, driven by product cycle of VMAX, ViPR 2.0, VNX, XtremeIO and ECS. The firm is maintaining its earnings estimates for all of 2014 and 2015. The report said:
While the storage market remains cyclically depressed, we continue to believe in a recovery over the next 12 months to 18 months and see EMC extending its sustainable competitive advantage versus peers. EMC remains our preferred pick in IT Hardware.
As far as how these $30 targets compare to the field, EMC’s consensus price target is currently $29.90 and its shares are trading at $26.78. EMC also has a dividend yield of about 1.8%. EMC’s 52-week trading range is $22.69 to $28.26.