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Merrill Lynch’s Srini Pajjuri yesterday asserted that a slide in storage switch producer QLogic (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