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Merrill Lynch’s Srini Pajjuri yesterday asserted that a slide in storage switch producer QLogic (NASDAQ:QLGC) in recent weeks is overdone, and advised investors to buy the stock.

“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.”

Writes Pajjuri:

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.

QLGC 1-yr chart
qlgc chart

Source: QLogic: Recent Stock Slump Overdone