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Storage Returns a Mixed Bag

Storage companies got mixed reviews from analysts and investors this earnings season -- and the two groups weren't always in sync. Brocade Communications Systems Inc. (Nasdaq: BRCD), for instance, was upgraded by two analysts today, though its stock price stayed put.

Credit Suisse First Boston Corp. and First Albany Corp. upgraded Brocade today following the company's earnings report last night (see Brocade Battles Back). Brocade's quarterly revenues increased by 18 percent sequentially, and earnings per share beat First Call estimates by $0.02.

Analysts seemed happy to see Brocade report a solid quarter in the face of recent inroads in the Fibre Channel director market by Cisco Systems Inc. (Nasdaq: CSCO). We have greater conviction about the company’s earnings visibility in light of its solid execution, a strong gross margin, a better pricing environment and the potential opportunity for its upcoming products,” wrote First Albany analysts in a note today. The firm upgraded Brocade to Buy.

Some accolades didn't come with upgrades. Brenden Smith of Goldman Sachs & Co. wrote that Brocade lived up it his previous rating of In-Line/Attractive. “We view this quarter as a critical step in reinforcing our positive view,” Smith wrote.

Still, while Brocade's stock price started strong today, it closed at its opening price -- $6.76.

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