UBS Cuts Price Target on Brocade Communications (BRCD) to $7.50; Reiterates Sell

UBS maintained a Sell rating on Brocade Communications (NASDAQ: BRCD), and cut the price target to $7.50 (from $8.50), following the company's 2Q earnings report. BRCD reported non-GAAP EPS of $0.22 on sales of $523mn, in the middle of the company's preannounced range. Management also expects the Ruckus acquisition to close by the end of May and laid out a F3Q pro forma of non-GAAP EPS of $0.14-0.17 on sales of $560-590mn.

Analyst John Roy commented, "Our Sell rating on Brocade is driven by public cloud incursion, weaker IT spending, and slower Fiber Channel growth, which we believe the weak guide supports. The F2Q non- GAAP EPS of $0.22 on sales of $523mn was in the middle of the preannounced range. The company said the market softness is expect to be a headwind to F3Q; we are lowering our below estimates from $0.20 EPS on sales of $537mn to slightly lower $0.19 on sales of significantly lower $510mn. Our C16 EPS estimate drops from $0.83 to $0.75 on weaker storage sales and lower gross margin."

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.

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