Needham & Company Maintains a 'Buy' on Xyratex (XRTX); F1Q11 Toward Low-end; Reducing Outlook on SI Weakness, but Largely Anticipated
8:24 am ET 04/01/2011-
Needham & Company maintains a 'Buy' on Xyratex (NASDAQ: XRTX), PT lowered by $1 to $15.
Needham analyst says, "Although XRTX execution remains solid, there are some offsetting factors within each of its business segments. SI should benefit from slowing HDD areal density growth (meaning more heads and platters), an expanding customer base (ie. Toshiba-N/R) and entering new HDD CAPEX segments offset by increased competition (Teradyne-N/R), uncertainty related to pending WDC/HGST combination, slower 2.5 /notebook demand and Japan disaster.
In NSS - expanding within IBM-N/R (V7000), anticipated higher volumes due to HP and Dell buying PAR and CML and good momentum at NTAP are somewhat offset by NTAP using XRTX/Jabil - 75/25% in
11 and up to 50/50 in 12 (although XRTX does get royalty), potential implications long-term of NTAP/Engenio acquisition and EMC transition to in-house in 2H 11." (FY11 EPS estimate lowered from $1.70 to $1.05, FY12 from $2.22 to $1.90).
I used to be indecisive. Now I'm not so sure.
