Goldman Sachs (GS) Has A Neutral Rating On Emulex (ELX)

Goldman Sachs

analysts had several investors meetings with Emulex

last week, and they concluded that Emulex (

) is well positioned for the second half of 2010. The company is trying to expand in the 10Gb Ethernet and converged network adapter segments, and it is estimating that its addressable market is going to grow at a 30% CAGR over the next four years. Emulex's revenue from portfolio of designs in 10Gb Ethernet, iSCI and FCoE could increase in the second half of 2010. Goldman's analysts believe that some of ELX's new products could have lower gross margins, but operating margins could move 20% over the intermediate term on higher volumes. Emulex (

) claims that the demand from Europe is still stable, and it noted that the acquisition of ServerEngines could be neutral to earnings as early as June 2011. Goldman Sachs (

) has a price target of $12.50 for Emulex (

), and the stock is currently trading at $9.73. Analysts see ELX as an attractive investment and believe that the key downside risks for this company are product cycle and acquisition integration miscues.