UPDATE: Emulex (ELX) Still a Buy Despite Ho-Hum Qtr - Needham & Company

May 3, 2013 10:11 AM EDT Send to a Friend
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Price: $5.21 -1.88%

Rating Summary:
    6 Buy, 13 Hold, 3 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 29 | Down: 28 | New: 24
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(Updated - May 3, 2013 10:11 AM EDT)

Needham & Company cut its price target on Emulex (NYSE: ELX) from $8.50 to $7 following Q3 results, but maintained a Buy rating.

Analyst Glenn Hanus said, "ELX reported F3Q rev./EPS (ex. Endace) in line (midpoint of guide) as slight weakness in 10GbE, due to slower than anticipated OEM inventory burn, and SCP was offset by stable FC and upside in ATP. Endace, included as of 2/26, added $5M of rev./ ~ EPS neutral. F4Q guide for Core ~$110M vs. Street $117M reflecting q/q decline in FC on server weakness, and q/q decline in SCP, partially offset by q/q growth in 10GbE. Inclusion of Endace yields $120M total guide. Over the next few Qs, ELX will be challenged by flattish/modest growth in 10GE rev. as meaningful 10GE growth will not resume until Ivy Bridge ramps. Endace should be the key growth driver in F14. Other growth enhancers that should partially offset declining trends include 16G FC ramp, 10/40GbE RDMAoE, ~$100M+ target opportunity. We reset our target to $7 (was $8.50) and recognize stock likely to be range bound nearer term over next couple quarters."

The firm moved FY 2013 EPS from $0.67 to $0.69 and FY 2014 EPS from $0.75 to $0.59.

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

Shares of Emulex closed at $5.94 yesterday.


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