Soundview downgraded Emulex (ELX) to neutral.
Analyst Glen Ingalls says appreciation beyond the low $20s range is likely to require improvements in IT spending and host bus adapters market growth beyond what he currently forecasts. Ingalls thinks the December quarter is on track but doubts the company will have enough visibility into calendar 2003 to provide guidance that takes estimates significantly higher.
He set a 95 cents calendar 2004 earnings per share estimate on $404 million in revenue, based on revenue growth of 16% in calendar 2003, and 22% growth in calendar 2004. Based on calendar 2004 estimates, he raised his $17 12-month target to $21.
Ingalls says Emulex remains well positioned in the host business adapter market, but he says he would wait for a pullback or evidence of better growth in calendar 2003 before buying the stock.