Wedbush Maintains an 'Outperform' on Brocade Communications (BRCD); Comments on October Qtr and Sale Rumors

November 10, 2009 11:37 AM EST

Wedbush maintains an Outperform on Brocade Communications Systems (Nasdaq: BRCD), raises price target from $10 to $12.

Wedbush analyst says, "We estimate that Brocade should be able to beat the top and bottom line Street estimates for October quarter. Demand for storage is healthy and almost all storage vendors (EMC (NYSE: EMC), LSI (NYSE: LSI), Emulex (NYSE: ELX), QLogic (Nasdaq: QLGC), etc) have reported strong storage sales for CQ3. Cisco (Nasdaq: CSCO) also reported very strong results for the October quarter. Furthermore, our own checks with OEM partners, resellers and customers lead us to believe that BRCD should beat the Street estimate of $521 / $0.13 for the October quarter...We believe small modular switch sales were weak whereas big directors and large switches sold well. We estimate services revenues held well in the October quarter...We do not believe that Brocade is up for sale. Some tech news websites have indicated that CEO Mike Klayko made it clear to employees at their world-wide sales kickoff last week that Brocade is not for sale. In our opinion, EMC or IBM (NYSE: IBM) is not interested in buying BRCD and it would be extremely difficult for Hewlett (NYSE: HPQ) or Dell (Nasdaq: DELL) to digest BRCD because of BRCD’s OEM sales model. Furthermore, in our opinion, the stars are all aligned for BRCD at this time and there has never been such an opportunity for BRCD to build a strong company with a large presence in the storage and data networking space. We believe BRCD’s shareholders see a lot of potential for the company to grow and would not be willing to sell the company at a share price in the low teens."

To see more analyst ratings on BRCD Click Here.

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