RBC Capital upgraded Emulex (ELX) to outperform from sector perform.
Analyst Robert Montague says additional channel data suggests an accelerating demand picture for the company's key original equipment-manufacturer customers, and he's seeing strong evidence of Emulex's key original equipment-manufacturer customers -- IBM particularly -- picking up into the calendar year-end. He notes Emulex is likely to provide additional color on business trends following the closure of the Vixel acquisition.
Montague is keeping the 94 cents fiscal 2004 (June), and the $1.10 fiscal 2005 earnings per share estimates, but he believes upside to his short-term estimates is likely. He notes Emulex traditionally enjoyed one of the strongest December-quarter patterns due to large high-end projects. He raised the $24 12-month target to $33.