NEW YORK (TheStreet) -- Shares of Brocade Communications Systems (BRCD) were falling 0.3% to $11.77 Friday after the data storage company announced the pricing of $500 million principal amount 1.375% convertible senior notes due 2020.

Brocade granted the initial buyers of the senior notes an option to buy up to an additional $75 million principal amount of notes to cover any overallotments. The sale of the notes is expected to close on Jan. 14.

The company said it expects net proceeds of about $490.4 million from the offering, or $564.1 million if the initial purchases use their full overallotment option.

Exclusive Report: Jim Cramer's Best Stocks for 2015

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Brocade plans to use $30.4 million of the proceeds to pay the cost of the convertible note hedge transactions, and about $48.9 million to repurchase shares. The rest of the proceeds will be used to redeem all of Brocade's outstanding 6.875% senior secured notes due 2020.

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

"We rate BROCADE COMMUNICATIONS SYS (BRCD) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, solid stock price performance, impressive record of earnings per share growth and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

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

  • BRCD's revenue growth has slightly outpaced the industry average of 5.3%. Since the same quarter one year prior, revenues slightly increased by 1.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Although BRCD's debt-to-equity ratio of 0.25 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 2.52, which clearly demonstrates the ability to cover short-term cash needs.
  • Powered by its strong earnings growth of 35.71% and other important driving factors, this stock has surged by 33.48% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, BRCD should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • BROCADE COMMUNICATIONS SYS has improved earnings per share by 35.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BROCADE COMMUNICATIONS SYS increased its bottom line by earning $0.54 versus $0.45 in the prior year. This year, the market expects an improvement in earnings ($0.92 versus $0.54).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 29.9% when compared to the same quarter one year prior, rising from $64.23 million to $83.42 million.
  • You can view the full analysis from the report here: BRCD Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.