SAN FRANCISCO -- Shares of data-storage maker
broke through their 52-week high on bullish analyst notes about sales of the company's equipment and software.
Analysts at Bear Stearns and Citigroup issued strong endorsements of EMC's ability to capitalize on trends that are creating demand for storage. In particular, analysts said EMC is in a good position to sell storage equipment to companies that are using virtualization technology to improve the efficiency of servers that run large data centers.
EMC shares were recently trading up $1.42, or 7.5%, to $20.45.
Virtualization is gaining in popularity because it helps companies cut down on IT expenditures by squeezing more use out of existing equipment. EMC's subsidiary,
, leads the industry in sales of virtualization software. VMware recently reported an 83% jump in revenue in the first six months of the year.
Industry analysts say that virtualization can add to already rising demand for data storage. Virtualized servers work better with equipment for so-called storage networks, which are increasingly a focus of EMC's product development.
Bear Stearns said that EMC's acquisition of VMware in 2004 underscores the company's ability to foresee the "next big thing" in IT spending. According to Bear, this foresight is taking EMC into data security and the fast-growing market for software to help companies manage and find the information tucked into storage equipment.
But EMC has lagged its smaller rival
in developing storage equipment that is best suited for virtualized environments, says IDC analyst Brad Nesbit. Also, Network Appliance's second-quarter software revenue surged 34%, greatly outpacing its peers, according to IDC.
The bullish outlook for data storage lifted Network Appliance's shares, which were recently trading up 76 cents, nearly 3%, to $27.70.
For other stocks making new highs, check out Today's 52-Week Highs List at Stockpickr.com.