Will This Price Target Increase Help Brocade Communications Systems (BRCD) Stock Today?

Story updated at 9:50 a.m. to reflect market activity.

NEW YORK (TheStreet) -- BMO Capital Markets raised its price target for Brocade Communications Systems (BRCD) to $11 Friday, reiterating its "market perform" rating.

Shares of Brocade gained 3.9% to $9.78 in morning trading.

The analyst firm also raised its EPS estimates for the company through 2015. Brocade is seeing higher growth across the board according to BMO analysts.

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Separately, TheStreet Ratings team rates BROCADE COMMUNICATIONS SYS as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate BROCADE COMMUNICATIONS SYS (BRCD) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • Although BRCD's debt-to-equity ratio of 0.26 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 2.55, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has increased to $168.24 million or 40.65% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 5.10%.
  • The gross profit margin for BROCADE COMMUNICATIONS SYS is rather high; currently it is at 69.88%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -2.54% is in-line with the industry average.
  • 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, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • You can view the full analysis from the report here: BRCD Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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