RBC Capital upgraded EMC Corp. (EMC) to outperform from sector perform.
Analyst Robert Montague says EMC looks on its way to report third quarter results at the high end of guidance or above. He says channel contacts note strong EMC-specific trends, above the expected seasonal pattern. He also expects EMC to benefit from a strong yearend mainframe cycle.
Montague notes the acquisition of Legato Systems should accelerate software revenue and margin contribution. He thinks his estimates should increase on the closure of the Legato deal later this fall. Currently, Montague sees 15 cents earnings per share in 2003, 21 cents earnings per share in 2004, and 30 cents earnings per share in 2005. He raised his $10 target to $14.