NEW YORK (TheStreet) -- D.A. Davidson downgraded QLogic (QLGC) to "neutral" from "buy" on Monday.

Shares of QLogic were falling 0.5% to $8.82 in morning trading.

The analyst firm lowered its fiscal 2016 EPS estimates for the Fibre Channel/Ethernet connectivity hardware maker to 71 cents a share from 75 cents a share. D.A. Davidson analysts also lowered their fiscal 2017 EPS estimates for QLogic to 88 cents a share from 91 cents a share.

The downgrade and lower guidance come days after after QLogic reported its financial results for the first quarter of fiscal 2016. QLogic reported earnings of 19 cents a share for the first quarter, in line with analysts' estimates for the quarter. Revenue fell 5.1% year over year to $113.4 million for the quarter, below analysts' estimates of $120.61 million.

D.A. Davidson analysts wrote, "QLGC has a strong number two position in the 10 Gig Ethernet connectivity market, and will likely be one of the first vendors to introduce 25 Gig products next year. Unfortunately the company has focused most of its sales efforts on Tier 1 server OEMs, who are losing market share in the cloud market to more nimble server vendors (such as Supermicro Computer (SMCI) - Get Report)."

TST Recommends

TheStreet Ratings team rates QLOGIC CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate QLOGIC CORP (QLGC) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive."

You can view the full analysis from the report here: QLGC Ratings Report

QLGC data by YCharts

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