Brocade's a Buy, Says Analyst

SAN JOSE, Calif. (TheStreet) -- Few people would describe storage networking as the sexiest part of the tech sector, but switch specialist Brocade(BRCD) presents plenty of upside to investors, according to at least one analyst.

Brocade, which makes switches for storage networks, is currently trading at about $6.40, making it an attractively-priced "strategic asset," says Brian Marshall, an analyst at Broadpoint AmTech.

The storage specialist, which bought Foundry Networks in 2008, has experienced a recent selloff, with its share price slumping almost 15% this year. For Marshall, though, this presents investors with a great buying opportunity.

"We continue to focus on the fundamentals and believe Brocade remains an extremely attractive asset with a cheap valuation," he wrote in a note released on Tuesday. Broadpoint, he added, is reiterating its buy rating and $11 price target for Brocade's shares.

The analyst feels that potential share loss to rival Juniper(JNPR) and alleged weakness in Brocade's federal business have weighed heavily on its stock, but he says that investors should not be unduly concerned.

"Foundry's federal vertical would need to decline over 55% quarter-over-quarter in order to have a 1 cent impact on Brocade's overall EPS in the January '10 quarter," he said. "The federal portion of the Foundry business is not material to Brocade's overall bottom line."

Brocade reports its first-quarter results on Feb. 22. Analysts surveyed by Thomson Reuters are expecting sales of $547.79 million and earnings of 15 cents a share, compared to $431.6 million and 15 cents a share in the prior year's quarter.