RBC Capital Cuts Price Target on Brocade Communications (BRCD) as Soft Demand Drives Revenue Miss
Get Alerts BRCD Hot Sheet
Rating Summary:
4 Buy, 22 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
Join SI Premium – FREE
RBC Capital maintained a Sector Perform rating on Brocade Communications (NASDAQ: BRCD), and cut the price target to $9.00 (from $10.00), following the company's 2Q earnings report. Brocade reported results at the midpoint of the preannouncement, with revenues/EPS of $523M/ $0.22 vs. Street at $529M/ $0.22. The revenue miss was driven by the softer demand across the SAN product portfolio and weak router sales within IP Networking.
Analyst Mitch Steves commented, "While results for the quarter were in-line with the recent pre-announcement, guidance was light driven by an anticipated -3.5% to -7.0% q/q decline in the SAN business (implies down ~9% y/y). Positively, the company anticipates seeing an uplift in Q4 due to increased US federal spending. From a Ruckus standpoint, assuming the transaction closes towards the end of May, it would contribute ~$50-60M to the topline and the gross margin would see a near-term negative impact due to channel inventory and deferred revenue recognition impact. Net Net: given the lighter than expected results from Core Brocade, we remain on the sidelines until the Ruckus transaction closes and we obtain visibility into the new combined entity from a growth and margin perspective. Adjust price target to $9 (from $10) to reflect lowered EPS estimates."
For an analyst ratings summary and ratings history on Brocade click here. For more ratings news on Brocade click here.
Shares of Brocade closed at $7.97 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- MarineMax (HZO) PT Lowered to $35 at Stifel
- Macquarie Upgrades ASM Pacific Technology (522:HK) (ASMVY) to Outperform
- Meta Platforms Inc. (META) PT Lowered to $575 at UBS, 'shares are offering a 3-to-1 skew'
Create E-mail Alert Related Categories
Analyst Comments, Analyst EPS Change, Analyst EPS View, Analyst PT ChangeRelated Entities
RBC Capital, EarningsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!