Piper Jaffray Cuts Price Target on Brocade Communications (BRCD) to $8 Following 2Q
Piper Jaffray maintained a Neutral rating on Brocade Communications (NASDAQ: BRCD), and cut the price target to $8.00 (from $9.00), following the company's 2Q earnings report. Brocade reported revenue of $523.3M, in-line with management's preannounced results of $518-528M. However, the results were well below initial guidance of $542-562M, driven by larger-than-expected declines in SAN and IP Networking revenue. Brocade guided 3Q revenue to $510-530M, which was well below the Street estimate of $546.5M.
Analyst Andrew Nowinski commented, "Brocade reported FQ2(Apr) results that were in-line with preannounced expectations, though the stock was trading down after-hours on lower guidance. Brocade is somewhat beholden to the weak demand trends in the storage market, which are expected to remain weak near-term, though IP Networking sales also came in below expectations. We believe the Ruckus acquisition broadens the company’s portfolio and will augment long-term earnings growth, but near-term will likely create headwinds. As such, we are maintaining a Neutral rating and lowering our price target to $8 (prev $9)."
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Shares of Brocade closed at $7.97 yesterday.