CSFB on ELX
ESTIMATE CHANGES
Emulex Corporation (EMLX, $23.61, HOLD) Target (12 Months): $20
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ELX Chips in Quarter; Tempers Near-term Growth Guidance
Emulex (ELX) posted fiscal fourth quarter revenue of $70.2 million and EPS of $0.16, both in-line withour expectations.
Sales of 2 Gig products increased 27% sequentially, accounting for over 60% of total quarterly fibre channel sales and helping to drive a 60 basis point gross margin improvement versus fiscal Q3.
While FICON adoption remains strong, a mix shift from HBAs to lower-priced chip solutions stunted overall revenue growth. Reflecting this trend, management noted that total HBA and FICON ASIC volumes increased 13% sequentially.
We have reduced our FY03 revenue estimate from $338 million to $301 million. However, we have increased our FY03 EPS from $0.70 to $0.72, due to higher gross margin assumptions and a reduced tax rate. For FY04, we have reduced our revenue estimate from $452 million to $382 million, but maintained
our EPS estimate of $0.92.
We have reduced our DCF-based 12-month price target from $30 to $20, and maintain our Hold Rating. Investors should assume that CSFB is seeking or will seek investment banking or other business from the covered companies.
Annual Prev.
EPS (US$) EPS.
6/03E 0.72 0.70
6/02E 0.53
6/01A 0.63
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