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STEC (STEC) Whacked On Competition Fears

September 17, 2009 4:18 PM EDT
Get Alerts STEC Hot Sheet
Price: $6.84 --0%

Rating Summary:
    0 Buy, 7 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 6 | Down: 3 | New: 1
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Shares of STEC, Inc. (Nasdaq: STEC) were brutalized today on fears about increased competition. Shares finished down 17% on volume that was 7x normal.

A number of analysts today discussed news from earlier in the week that privately-held competitor Pliant Technology would enter the enterprise solid-state drive market with its enterprise flash drive.

Analyst at Wedbush Morgan may have started the downside momentum this morning after cutting their price target from $45 to $39. In a note this morning, Wedbush Morgan analyst Betsy Van Hess said, "Although our checks also indicate a possible Q3 beat and potential raise to Q4 above the Str. and our estimates is likely in the cards driven by higher than expected ZeusIOPs shipments, we believe the stock could continue to face downward pressure. We are concerned STEC’s “window of opportunity” to maintain a market leadership position and secure design wins at Tier I OEMs in the SATA/SAS SSD enterprise market ahead of the competition may be closing." Suprising she maintained her Outperform rating.

The Wall Street Journal noted that Stifel Nicolaus analyst Aaron C. Rakers said, "While we do not believe this announcement changes Stec's fundamental picture over the next few quarters [i.e., still believe upside potential exists to September and December quarter expectations], we believe this does support our cautious thesis ahead of what looks to be the potential for a meaningful increase in competitive noise over the coming quarters."

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