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Datalink Corporation Message Board

  • carp_slayer carp_slayer Oct 5, 2012 8:27 AM Flag

    Analyst Updates

    So far-

    Needham Maintains Buy rating cuts target to $11.00 from $12.50

    Canaccord Genuity Maintains Buy rating cuts target to $10.00 from $12.00

    Cantor Maintains Buy rating cuts target to $10.00 from $11.50

    I expect Q4 will not see major improvements in customer outlooks, unless/ until the uncertainty is removed.

    Everything gets stored-- everything---the data center business has not been cancled, and virtualization and Big Data will continue to be drivers of growth.

    $6.xx looks possible, and could be a good entry/ add point.

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    • Some color from FBN:

      Datalink (DTLK) Acquisition of Strategic Technologies is Long-Term Positive

      October 05, 2012 12:55 PM

      Stocks: DTLK,

      Datalink Corp.'s (NASDAQ:DTLK) acquisition of IT services provider Strategic Technologies Inc. is a long-term positive for the company, writes FBN Securities analyst Shebly Seyrafi.

      The provider of data-center services agreed to purchase Cary, North Carolina-based Strategic this Tuesday, following the acquisition of Minneapolis-based data center IT services firm Midwave Corp. in October 2011.

      Seyrafi reiterated his "Outperform" rating, but lowered his price target on the stock to $10 from $13 a day after Datalink cut its outlook for the third quarter. Datalink said it saw expected contracts pushed back by as much as 90 days or more due to uncertain economic conditions.

      The analyst said DTLK saw increasing customer cautiousness and contract push-outs (continuing a trend that it saw starting in June).

      "However, we applaud the acquisition of StraTech and believe that with another possible similar-sized acquisition within 18 months, the company has the opportunity of getting close to its annual revenue and operating margin target of $750 million and 7.5 percent," Seyrafi wrote. "Note that DTLK is noting that its pipeline has never been stronger in terms of the number of overall opportunities and the number of million-dollar opportunities."

      Seyrafi said he sees several positives from the Strategic deal, including addition of $65 million in incremental annual revenue, with higher GMs. StraTech's revenue had been growing 10 percent to 15 percent a year in 2011 and the first 9 months of 2012.

      Although StraTech's operating margin is lower than DTLK, DTLK should have the ability to obtain synergies from cost rationalization, the analyst said and noted that DTLK expects the deal to be accretive to net income within a quarter.

      The acquisition doubles DTLK's revenue from Symantec, a higher-margin category. It also increases DTLK's business with NTAP and HDS and adds a strong presence in archiving, Seyrafi wrote.

      Datalink bought StraTech for roughly $13.2 million in cash and the issuance of 269,802 shares of Datalink common stock, assumed about $20.8 million of StraTech's liabilities and acquired around $16.0 million of assets.

      On Friday, shares shed 13.28 percent to trade at $7.44. In the past 52 weeks, the stock has been trading between $6.94 and $11.00."

    • Needham & Co. Maintains Buy, Cuts PT on Datalink (DTLK)

      "Yesterday Datalink (NASDAQ: DTLK) warned its third quarter earnings would be below consensus. Analysts attributed this to slippage of large deals as customers remained cautious regarding large capex decisions.

      "Overall, demand is strong and pipeline is robust with $1M deals, but uncertain macro/election is lengthening sales cycles and pushing out some contracts," said analyst Glenn Hanus of Needham and Company.

      Needham & Company maintained a Buy rating on Datalink Corporation but cut its price target to $11.00 (from $12.50)."

      FBM Maintains Outpreform rating cuts target to $10.00 from $13.00

    • Thanks for the update (especially from the analysts).

      Bottom line: business is differed so when the dust settles, DTLK is a Buy.

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