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Couple of firms comment on Xyratex (NASDAQ:XRTX) after the company released its Q1 results Tuesday night:

Baird notes XRTX reported FQ107 revenue/EPS results of $236 million/$0.40, ahead of consensus of $230 million/$0.31, on stronger-than-anticipated revenue and gross margins. The firm is encouraged with the continued fast growth in the systems business (27% YOY), and healthy infrastructure margins.

Management provided FQ207 guidance of $203-$218 million/$0.09- $0.19, slightly below consensus estimates of $210 million/$0.16. Given the unchanged outlook for F07, the firm is leaving their estimates unchanged.

Baird believes both Seagate (NASDAQ:STX) and Hitachi (HIT) represent meaningful upside opportunities, although the timing is unclear. To the extent STX is not able to re-use existing MXO equipment, it will need to purchase new equipment from XRTX, which could result in upside in the next two quarters. Management reiterated expectations that Hitachi business will not meaningfully add to revenue/EPS until F08; however, the firm suspects Hitachi's recently announced plans to refresh 75% of its product line-up in C2007 could accelerate capital spending on XRTX equipment as Hitachi attempts to transition manufacturing operations to lower-cost geographies and optimize manufacturing procedures.

Maintains Outperform rating as XRTX is s attractive with a valuation of 11x C08E EPS, beatable forward estimates, growth opportunities with STX and Hitachi, and a stable, fast-growing systems business.

RBC Capital notes Xyratex posted healthy February 2007 quarter results, beating Street consensus on the top line and the bottom line.

The lower-than-expected fiscal 2Q07 non-GAAP EPS forecast relates to slightly higher-than expected operating expenses and tax rate (due to lower mix of Storage Infrastructure revenue/ income which carries a 0% tax rate). For FY07, Xyratex continued to position its Storage Infrastructure business as volatile but positive. However, the exact timing of Seagate orders remains difficult to forecast, as it completes the Maxtor integration efforts. Notably, Xyratex's Networked Storage Solutions revenue guidance for fiscal 2Q07 includes NetApp growth of 4-5% (past two years, NetApp has posted ~15% sequential growth).

Firm maintains 12-month price target of $25 saying they assume a probable, though not certain, upside/downside scenario of $30/$14 on above/below consensus execution. On a 12-month basis, they continue to rate Xyratex shares Outperform.

Notablecalls: Tough to call this one. Looks like a non-event.

XRTX 1-yr chart