NEW YORK (TheStreet) -- DA Davidson initiated coverage of QLogic (QLGC) with a "buy" rating on Tuesday.

The analyst firm set a price target of $17 for the semiconductor company. DA Davidson expects QLogic to report earnings of 99 cents a share for fiscal 2015, and $1.02 a share for fiscal 2016.

"While the Fibre Channel market in general is mature, supplying network connectivity for storage devices is still in the growth stage, as new high-speed storage systems need fast access to servers," analyst Mark Kelleher wrote. "QLGC has a particularly strong position supplying host/bus adapters (HBAs) to storage OEM customers. As Fibre Channel migrates from 8 gigabit to 16 gigabit speed, a new Fibre Channel product cycle should emerge to further drive growth."

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Separately, 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and feeble growth in the company's earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 13.5%. Since the same quarter one year prior, revenues rose by 13.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • QLGC has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.05, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • QLOGIC CORP's earnings per share declined by 7.7% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, QLOGIC CORP swung to a loss, reporting -$0.20 versus $0.80 in the prior year. This year, the market expects an improvement in earnings ($0.99 versus -$0.20).
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Computers & Peripherals industry and the overall market, QLOGIC CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: QLGC Ratings Report

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