Stifel Positive on Cray (CRAY) vs. IBM in High-End Supercomputer Share Gain Over Last Six Months

Stifel affirms Cray, Inc. (Nasdaq: CRAY) with a Buy rating and $40 price target following the Top500.org releasing its updated Top 500 global list of supercomputers.

Analyst Aaron Rakers noted the following positives for Cray:

• Of the 87 new supercomputers listed for the first time on the June 2015 Top500 list, Cray accounted for ~14 percent or 12 of them (vs. ~19 percent or 13 of the 68 new total systems on the November 2014 list and ~7 percent or 8 of the 114 new total systems on the June 2014 list). More importantly, there were only 26 new supercomputers in the top 100 that were listed for the first time and Cray accounted for ~27 percent or 7 of them. Cray increased its share of the top 100 to 31 percent from 28 percent on the November 2014 list. IBM did not add any new supercomputers to the top 100 and its share declined to 21 percent (including Lenovo), down from 28 percent previously. Including all systems, IBM and Lenovo combined only added 8 new systems. We believe this continues to highlight IBM and Lenovo’s competitive dislocation in the supercomputing industry.
• In terms of total cores deployed, the Jun ‘15 list highlights a re-accelerating yr/yr growth trend – the total of 25.223 million cores deployed represents a 16.4% yr/yr increase, vs. +44%, +39%, +12%, and +12% yr/yr in the prior four lists (Jun ‘13, Nov ‘13, Jun ‘14, Nov ‘14, respectively). In terms of total performance (Rmax; petaflops), the total Top500 list now stands at 363.3 petaflops, an increase of 32.6% yr/yr, a re-acceleration from 24% yr/yr increase in the Nov ‘14 list and +23% yr/yr in the Jun ‘14 list, albeit down from the 81% and 54% yr/yr increases seen in the Jun ‘13 and Nov ‘13 lists, respectively. There are a total of 68 systems with +1 petaflop performance, vs. 50 systems in Nov ‘14 list and 37 systems on Jun ‘14 list.

Rakers is overall positive on Cray relative to IBM (NYSE: IBM) in the high-end supercomputer market in terms of share increase over the last six months.

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

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