Deutsche Bank downgraded Emulex (ELX) to hold from buy.
Analyst Sabrina Ricci says Emulex has skyrocketed since Oct. 25. With the company now trading at 34 times her calendar 2003 earnings per share estimate, she thinks the valuation has reached an appropriate level. Ricci raised her $20 target to $24 to reflect her multiple of 32 times the calendar 2003 earnings per share, which she believes is appropriate. Ricci sees year-end investment momentum associated with the entire storage sector, but she doesn't expect an immediate catalyst until closer to the end of the quarter. She also notes the technology spending environment is still fundamentally tough, and thinks it is time to take some money off the table.
Ricci sees 74 cents fiscal 2003 (June) earnings per share.