Roth Capital keeps its strong buy rating on Computer Network Technology (CMNT ).
Analyst Ian Gilson says the second quarter was the first opportunity to see the impact of the company's April 2003 acquisition of Inrange Technologies. He says the result was a fantastic quarter. Gilson notes 2 cents pro forma earnings per share compared to expectations of a 7-cent loss. He says sales were slightly below his estimate, but margin improvement was more than enough to offset the shortfall.
Gilson notes many were skeptical of Computer Network's ability to manage the acquisition. He thinks the company can take $20 million, or perhaps $25 million, out of Inrange's cost structure. Furthermore, Gilson sees 27 cents 2003 pro forma earnings per share, and 80 cents 2004 pro forma earnings per share. He has a $10 target.