Credit Suisse from today: Reiterate Outperform $20 price target
* While we view the departure potentially impacting the long-term strategic vision of the company, we do not see it affecting the intermediate-term operations given that the core management team remains in place. We reiterate our Outperform and $20 TP.
*New customer wins to drive growth. Revenue diversification is improving, and we believe customer wins over the last 12-18 months (such as Salesforce, China Mobile, Alibaba, and US and Chinese government agencies, among others)could become meaningful. In fact, the visibility there is beginning to improve; the number of customers generating more than $1 mn has grown to 12 quite rapidly, and they have 4 customers over $5 mn. We see sales of $439mn/$642 mn in FY13/14, above consensus.
*An inexpensive and strategic asset. FIO trades on an EV/revenue of 1.7x, 50% below next generation datacenter peers and in line with the slower growth traditional storage sector. With an EV today of $1.1 bn we would not rule out a takeover given its disruptive technology and IP, CSCO, EMC, INTC, and potentially IBM, NTAP, ORCL, and Samsung could be suitors.