- Baird is positive on Xyratex (NASDAQ:XRTX) following recent conversations with management and feedback from resellers/end users. Firm believes Systems business will continue to benefit from NTAP exposure and ramp at new customers, while Infrastructure (hard drive capital equipment) business has incremental opportunities at existing and new customers.
Believes XRTX's Systems business will continue to grow well in healthy enterprise storage market. Firm's Q3 VAR survey suggests strong Q3/Q4 pipeline with particular momentum for NTAP. XRTX should continue to benefit from its exposure to NTAP (~50% overall customer) and host of fast-growing Tier 2 vendors.
Trading at <11x CY07E EPS, they believe shares present an attractive entry point for fairly well-positioned company with solid prospects over the next several years. Maintains Outperform and $40 tgt.
Notablecalls: I'd keep an eye on XRTX over the next week or so. I think it can move higher if the overall tape stays strong.
- Morgan Stanley is defending Multi-Fineline Electronix (NASDAQ:MFLX) after co's merger partner MFS announced that June qtr revenue will be be 28% lower sequentially.
Firm notes they remain confident in their C2Q06 estimates for M-Flex earnings of $0.52 on sales of $132 million. They do not believe the company is experiencing the same weakness as MFS since the companies have minimal model overlap, Motorola's overall handset business appears to have had a solid C2Q06, and M-Flex set a manageable bar with its original C2Q06 guidance. The intrinsic value of MFS has declined since M-Flex announced the acquisition and the firm believes M-Flex management may consider renegotiating deal terms.
Sees the 18% decline in M-Flex shares a an overreaction and expects the stock to move higher when the company reports in line C2Q06 results. The stock is trading at 8x C2007 EPS and the firm expects the company to grow sales 30% annually for the next few years. Maintains Overweight rating.
Notablecalls: Interesting situation. I wonder how many hedgies got short the common after Channel News Asia broke the story yesterday. Buying MFLX for a trade after it fills the Aug-2005 may actually work. I won't call it an actionable call though.
Believes XRTX's Systems business will continue to grow well in healthy enterprise storage market. Firm's Q3 VAR survey suggests strong Q3/Q4 pipeline with particular momentum for NTAP. XRTX should continue to benefit from its exposure to NTAP (~50% overall customer) and host of fast-growing Tier 2 vendors.
Trading at <11x CY07E EPS, they believe shares present an attractive entry point for fairly well-positioned company with solid prospects over the next several years. Maintains Outperform and $40 tgt.
Notablecalls: I'd keep an eye on XRTX over the next week or so. I think it can move higher if the overall tape stays strong.
- Morgan Stanley is defending Multi-Fineline Electronix (NASDAQ:MFLX) after co's merger partner MFS announced that June qtr revenue will be be 28% lower sequentially.
Firm notes they remain confident in their C2Q06 estimates for M-Flex earnings of $0.52 on sales of $132 million. They do not believe the company is experiencing the same weakness as MFS since the companies have minimal model overlap, Motorola's overall handset business appears to have had a solid C2Q06, and M-Flex set a manageable bar with its original C2Q06 guidance. The intrinsic value of MFS has declined since M-Flex announced the acquisition and the firm believes M-Flex management may consider renegotiating deal terms.
Sees the 18% decline in M-Flex shares a an overreaction and expects the stock to move higher when the company reports in line C2Q06 results. The stock is trading at 8x C2007 EPS and the firm expects the company to grow sales 30% annually for the next few years. Maintains Overweight rating.
Notablecalls: Interesting situation. I wonder how many hedgies got short the common after Channel News Asia broke the story yesterday. Buying MFLX for a trade after it fills the Aug-2005 may actually work. I won't call it an actionable call though.
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