Fearful of a bleak upcoming September quarter across the storage sector, brokerage firm CIBC World Markets
has reduced its earnings expectations for the group of storage networking companies it covers. But the firm's maintaining a Buy rating on the stocks in anticipation of an upswing in 2002.
Paul Mansky, enterprise analyst with CIBC, says he is still optimistic about the potential for this market, but in light of the September 11 attacks, he believes IT spending has been put on the back burner, at least for this quarter.
In response, the firm has revised its sales and earnings per share (EPS) estimates for the upcoming quarter downward for Brocade Communications Systems Inc. (Nasdaq: BRCD), Network Appliance Inc. (Nasdaq: NTAP), and QLogic Corp. (Nasdaq: QLGC).
Mansky has cut his estimates for Brocades fourth quarter (ending October) from $120 million in sales and $0.05 in EPS to $106 million and $0.03, respectively. For the year, the firm expects sales and EPS to be $502 million and $0.27. CIBC has dropped its 12-month price target for Brocade stock from $50 to $28 a share.
Network Appliance and QLogic got similar revisions. Second quarter (ending October) sales and EPS for Network Appliance have been cut by CIBC from $200 million and $0.01 to $188 million and breakeven. The 12-month price target has been cut from $17 to $14 a share.