Wedbush Upgrades Blue Coat Systems (BCSI) to Outperform

November 5, 2009 1:48 PM EST

Wedbush upgrades Blue Coat Systems (Nasdaq: BCSI) from Neutral to Outperform. The firm also boosted its price target from $18 to $30.

The firm attributed the upgraded to:

1. positive Q2 preannouncement which was at the high end of guidance suggesting that visibility continues to improve.
   
2. likelihood of significant OM expansion due to the restructuring and cost cutting of the company's R&D and sales functions.
   
3. positive checks with the channel indicating the deal pipelines are improving noticeably which could lead to revenue outperformance over the next few quarters and
   
4. the pending announcements of OEM agreements with key vendors in the near future.

Wedbush raised its FY10 EPS estimate from $1.02 to $1.23, versus the consensus of $1.07, and its FY11 estimate from $1.14 to $1.56, which compares to the Street estimate of $1.30. The firm now sees FY10 sales of $500.8 million, up from $487.5 million previously, and FY11 sales of $574.9 million, compared to $546.7 million previously. The Street is currently looking for FY10 and FY11 sales of $490.32 million and $549 million, respectively.

Blue Coat Systems, Inc. engages in the design, development, and sale of proxy appliances, and related software and services that optimize and secure the delivery of business applications and other information to distributed users over a wide area network (WAN) or the public Internet/Web.

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