Ahead of the Bell: Analysts upbeat on Brocade

Analysts upbeat on Brocade Communications despite mixed forecast for 2010

• On 9:15 am EDT, Wednesday September 23, 2009

BRCD

NEW YORK (AP) -- Analysts remain upbeat on Brocade Communications Systems Inc. despite a likely shortfall in earnings over the next year.

The San Jose, Calif., network equipment maker updated its financial outlook late Tuesday. It expects revenue to top expectations next year at $2.25 billion to $2.45 billion. Analysts polled by Thomson Reuters expected $2.21 billion.

But Brocade expects earnings of 56 cents to 61 cents per share, while analysts were looking for 63 cents.

Lazard Capital Markets analyst Ryan Hutchinson cut his price target for the stock to $10 from $11, given the lower earnings forecast.

But he kept a "Buy" rating on the stock. In a client note, he said the company's upbeat sales projection reflects "optimism that end-market demand is improving ... and confidence in the company's solid positioning and ability to execute."

"Brocade is now a stronger networking player and we expect it to capitalize on the new opportunities," Jefferies & Co. analyst Munjal Shah said in a note, also reiterating a "Buy" rating.

Following the company's analyst day in Boston on Tuesday, Shah said he expects Brocade to drive long-term growth with expanded partnerships, new products and forays into new markets.

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