Analyst Mansky acknowledges that there is still some investor skepticism surrounding Emulex, but points to the company's return to sequential growth as well as its potential for margin expansion.
"The December quarter is tracking above our expectations and consensus," he added. "We believe the company can achieve an annualized earnings power of 75 cents to 80 cents within the next six months." Analysts surveyed by Thomson Financial expect Emulex to post fiscal second quarter revenue of $90.68 million and earnings of 12 cents a share. For the current fiscal year, the firm is expected to earn 43 cents a share. This has certainly been an eventful year for the storage specialist, which spurned Broadcom's(BRCM) takeover bid and then became embroiled in a legal battle with the chip maker. Investors were nonetheless warming to the company's stock on Friday. Emulex shares rose 17 cents, or 1.66%, to $10.44 despite a broader dip in tech stocks that saw the NASDAQ slip 0.41% Emulex is not the only storage company feeling analyst love. FBR Capital, for example, reinitiated its coverage of EMC on Thursday and gave the storage giant an outperform rating and a $21 price target. "While storage is a mature industry, the move toward virtualization within the data center well positions EMC to take advantage of this next-generation technology shift," explained FBR analyst Daniel Ives, citing the company's customer base, brand awareness, and product mix. EMC owns 80% of virtualization trailblazer VMware(VMW), which was one of the TheStreet's top tech picks for 2010. EMC has also been overhauling its high-end Symmetrix storage system. "Although we do not believe the road ahead will be an easy one, our field checks give us confidence that EMC should see a nice uplift in growth from a refreshed Symmetrix product cycle, coupled with pent-up demand from its massive enterprise installed base," said Ives. EMC shares crept up 7 cents, or 0.39%, to $16.65 on Friday. -- Reported by James Rogers in New York >>See our new stock quote page.TheStreet Premium Services
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| Dow Jones | S&P 500 | NASDAQ | 10-Year Note |
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