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Brocade Shares Jump After RBC Upgrade

The Associated Press

NEW YORK (AP) — Shares of Brocade Communications Systems Inc. climbed Thursday after an analyst upgraded the data storage equipment maker, saying that concerns that the company may break debt covenants are "dissipating."

RBC Capital Markets analyst Mark Sue upgraded Brocade to "Outperform" from "Sector Perform." He said the company now looks to have "ample cash flow from operations to service the debt."

With the debt worries easing, Sue said investors may now turn their focus on the company's strong position in the fibre channel market and its solid relationship with manufacturers, among other things. Brocade makes fibre channel switches and related software, which is used to connect servers and storage systems.

Sue also noted that the company has a longer-term opportunity in host bus adapters, which are used to connect a host system, such as a computer, to other network devices.

The company's current quarter, Sue added, may be progressing toward meeting expectations, but nonetheless "there's still work to be done, considering the April quarter end."

Shares of San Jose, Calif.-based Brocade rose 18 cents, or 6.1 percent, to $3.12 in afternoon trading. In the past 52 weeks, the stock has traded in the 52-week range of $2.05 and $9.09.