Analyst Picks and Pans: QLGC, AMCC, AMAG

QLogic (QLGC)

Needham downgrades to hold from buy

Needham analyst Glenn Hanus said on May 1 that QLogic posted $0.20 fourth-quarter non-GAAP EPS vs. the $0.21 that he expected. Hanus noted that Host products were down 20% year-over-year, while Network products fell 9%. Hanus cut his $0.23 first-quarter EPS estimate to $0.17, and his $0.98 fiscal 2010 (ending March) view to $0.79. However, while the macro environment is deteriorating, impacting demand across its lines, QLogic seems to be executing with some share gain in FC HBA (standard storage management software interface) in 2008.

Hanus downgraded the shares as QLogic approaches his target, M&A speculation been contributing to valuation, and fiscal 2011 results are difficult to forecast.

Applied Micro Circuits (AMCC)

Oppenheimer upgrades to outperform from perform

Oppenheimer analyst Dan Morris said on May 1 that AMCC's $0.18 fourth-quarter non-GAAP loss per share (including results from its divested 3Ware business) compares with Wall Street's $0.12 loss estimate. Morris thinks AMCC management's efforts to right-size the business injected much needed leverage into his model. He noted that cost controls and restructuring reduced operating expenses from a peak of $40 million per quarter last year to an expected $28 million in the first quarter; also, the 3Ware divestiture jettisoned an underperforming, lower-margin asset, while padding already sizable cash balances. Morris noted that a sharp rebound in bookings gave management visibility into the September quarter. He raised his $0.21 fiscal 2010 (Mar.) loss estimate to $0.12 EPS. He set a $7 price target.

AMAG Pharmaceuticals (AMAG)

Needham reiterates buy

Needham analyst Mark Monane noted that on Apr. 30 the FDA informed AMAG that recent inspection of its manufacturing facility has addressed outstanding questions, and a re-inspection is not needed. Monane said he's positively inclined (and even more so) towards ferumoxytol. From a regulatory point of view, he noted uncertainty around FDA approval has decreased markedly after the Apr. 30 news; the one remaining item is label discussions, which is usually the last step in approval process.

Due to his confidence in ferumoxytol and its market opportunity, as well as in the company's management team, he reiterated his buy rating and $80 price target.

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