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Data storage company Xyratex LTD (XRTX) will report its 2nd quarter earnings after the market closes today. XRTX is expected to earn 11 cents for the quarter. We believe they will report a number that will exceed investors’ and analysts’ expectations. Xyratex popped 15% after surprising by 3 cents last quarter. We believe they will beat by at least a penny.

There has been a recent tug-of-war between analysts as Baird and Wachovia have recently downgraded the stock while the Bank of Montreal upped its forecast. The Correct Call is siding with the Canadians in this case. XRTX only trades at 9.72 times its forward earnings and .70 times sales. Both numbers seem fairly low for XRTX as it is expected to grow the bottom line by more than 40% in the next 12 months.

Suggested Stop:$16.94

Source: Earnings Preview: Xyratex