What Analysts Are Saying After Brocade's Earnings

Brocade Communications Systems Inc. (NASDAQ: BRCD) reported its fiscal second-quarter after the markets closed on Thursday. 24/7 Wall St. has included some highlights from the earnings report, as well as what analysts are saying about Brocade after the fact.

The company posted $0.22 in earnings per share (EPS) on $523 million in revenue. Consensus estimates called for $0.22 in EPS on revenue of $541.1 million. Previously the company released preliminary results that predicted revenue in the range of $518 million to $528 million, compared to the previously guided range of $542 million to $562 million. EPS are expected to be in the range of $0.21 to $0.23, down slightly from the previous range of $0.22 to 0.24.

Management thinks that despite the challenging environment for both SAN and IP networking, Brocade had a productive second quarter. Additionally the company began shipping its industry-leading Gen 6 Fibre Channel switching solution, and garnered its first customer win for the New IP-based mobility platform, Brocade Virtual Core for Mobile, that it launched earlier in the quarter.

Merrill Lynch gave its investment rationale as follows:

Brocade trades at a significant discount to peers despite: 1) a more durable SAN business that expectations, 2) a number of product cycles over the next several quarters impacting business lines that account for over 87% of product revenues and 3) long-term opportunities in the growing SDN and NFV trends.

A few other analysts also weighed in:

  • Barclays lowered its price target to $9 from $10.
  • Goldman Sachs has a Neutral rating and lowered its price target to $9 from $10.
  • Piper Jaffray lowered its price target to $8 from $9.
  • RBC lowered its price target to $9 from $10.
  • BMO has a Market Perform rating and a price target of $8.

Shares of Brocade closed trading at $7.97 on Friday. The stock has a consensus analyst price target of $9.80 and a 52-week trading range of $7.40 to $12.88.

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