UPDATE: Aegis Capital Corp. Initiates Coverage on QLogic Corporation with Buy Rating, $15 PT on Market Leader Position

In a report published Thursday, Aegis Capital Corp. analyst Jayanta Datta initiated coverage on QLogic Corporation QLGC with a Buy rating and $15.00 price target. In the report, Aegis Capital Corp. noted, “QLogic is a highly profitable market leader in the server and storage connectivity industry. The firm is resuming top-line growth after several quarters of retrenchment. It is the leader in an industry sector that is essentially a duopoly. We conservatively estimate that revenue grows 4% in FY2015 after declining in FY2013 and FY2014. Given the firm's high and stable ~68% gross margin and 20% operating margin, the revenue growth should lead to significant earnings growth. The balance sheet is strong with almost $5 per share in cash and no debt. The company generates large amounts of free cash flow and actively buys back stock. It has been consistently profitable and recently recorded its 73rd consecutive quarter of non-GAAP profitability. In our view, the stock is undervalued with near-term upside potential from continued earnings strength. We are initiating coverage with a Buy rating and a 12-month price target of $15.00 per share.” QLogic Corporation closed on Wednesday at $12.33.