Broadpoint AmTech is reiterating its “Buy” rating on Brocade, but is raising its target to $10.25 from a prior level of $9.00. That of course is not an all-time high, but that would be a high not seen in over two years and may even represent a 5-year high if the target is achieved. If you will recall, this was also touted a cheap overlooked tech stock by none other than Jim Cramer earlier this month. Shares were at $5.88 on Cramer’s call, and they closed at $7.13 yesterday.
This report calls Brocade an attractively priced “strategic asset” offering both SAN networking and Ethernet switching/routing products. The analyst call here noted that Brocade’s quarter was solid and the guidance for revenues above $1.9 to $2.0 billion. Its only issue was declining margins from the lower Foundry ethernet being under 50%, but the firm believes that will head north of 60%.
For fiscal-2010, Broadpoint AmTech now sees revenues of $2.5076 billion, 58.9% gross margin, sees earnings at $0.85 EPS; that compares to prior estimates of $0.75 EPS and $2.319 billion in revenues.
It appears as though this $10.25 target is now the highest target from the analyst community that follows Brocade. AmTech just initiated its coverage on the firm with a “Buy” rating last month, and last month we also saw both Piper Jaffray and Jefferies raise their ratings to “Buy” as well.
Brocade closed at $7.13 yesterday, and its 52-week trading range is $2.05 to $9.09.
JON C. OGG
MAY 22, 2009
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