Sterne Agee Upgrading Blue Coat Systems
Sterne Agee is out with a research report on Blue Coat Systems Inc. (NASDAQ: BCSI) and it is upgrading shares to Neutral from Underperform after it reported earnings yesterday.
In a note to clients, Sterne Agee writes, "Certainly Blue Coat's levered model swings both ways and 2Q12 results show how several million in revenue upside can drive strong EPS outperformance. We still contend that moving into additional markets such as WAN Op and Network Management/Rate Shaping has led to some of the underperformance in the company over the last year. That said, we are cognizant that given the better results this quarter, the market will begin to assign a higher multiple on the business and some floor on valuation will be established. Key comparables include RVBD at 21x CY12 adjusted PE, WBSN at 11x and FTNT at 44x –companies that are growing CY2012 revenue at 23% for RVBD, WBSN at 4% and FTNT at 17% vs. BCSI at 14x (after hours trading at $20.40) and CY2012 growth at 4%."
Shares of BCSI are up $3.64 in pre-market trading to $20.55.
