UPDATE: Goldman Sachs Lowers PT on Brocade Communications Following Meaningful Guide Down

In a report published Friday, Goldman Sachs analyst Kent Schofield reiterated a Sell rating on Brocade Communications Systems BRCD, but slightly lowered the price target from $5.10 to $4.80. In the report, Schofield noted, “We believe it is increasingly becoming apparent that Brocade's FY12 Data Storage growth of 9% was the function of pent up demand for 16Gbps Fibre Channel and associated ASP increases. Now that these two tailwinds are in the rear-view mirror, we do not expect that Brocade's Data Storage business will achieve yoy growth until the July quarter of 2014. We expect declines to continue in part due to Cisco's 16Gbps product set increasing competition in the marketplace later this year. We expect Brocade's overall gross margin to be negatively impacted by Cisco's entrance as well as by increase product mix from lower-gross margin IP business.” Brocade Communications Systems closed on Thursday at $5.74.