UPDATE: Credit Suisse Initiates QLogic at Underperform on Growth and Margin Challenges

Credit Suisse initiated coverage on QLogic

with an Underperform rating and a $10 price target. Credit Suisse commented, "Technology shifts in QLogic's core market, broader technology and lack of solid high-margin revenue alternatives should increasingly challenge Qlogic's growth and margins. … We expect four factors to challenge management's ability to reinvest in the business and return cash to shareholders: (1) core Fibre Channel (about 90% of revenue), should decline at an increased rate and drop at a 9% CAGR long term; (2) growth of commodity servers and consolidation of enterprise servers, to which QLogic has exposure; (3) uncertain traction of SSDs and only tepid efforts in growth adjacencies; and (4) relative stagnation in structured data." QLogic closed at $11.09 on Wednesday.