“QLGC has sold off since January due to concerns over slowing growth in the [fiber channel switch] business and speculation surrounding a potential miss for the [fiscal fourth quarter ending March],” he wrote. But he thinks the stock, at 15x calendar 2007 estimated EPS (ex-cash) “appears to be pricing in a miss already.”
We expect the switch business to regain momentum in the [second half]…We think additional share buybacks are also likely and believe the risk/reward is favorable for investors with s 2-plus quarter horizon.
Pajjuri maintains a Buy rating on the stock, with a $24 price target.
QLogic shares yesterday were up 45 cents to $17.57. Before yesterday, the stock has been down $4.80, or 22%, for the year to date.