UPDATE: Sterne Agee Initiates Coverage On Mellanox Technologies, Ltd. As All Focus Turns To Haswell Launch

In a report published Wednesday, Sterne Agee analyst Alex Kurtz initiated coverage on Mellanox Technologies, Ltd. MLNX with a Neutral rating and $46.00 price target. In the report, Sterne Agee noted, “We expect a major tailwind behind the Haswell launch starting this quarter, especially within the $11B HPC market that carries pent-up demand into 2H14. Yet, the key challenge we see with further upside in the near term is that the forward P/E could be capped near 20x ex cash (peak between 20x and 25x) and with potential earnings power of $2.20 in FY2015 (plus cash) yields a near-term upside case of ~$50. Given inherent risk with its OEM model, we are initiating with a Neutral rating, $46 PT.” Mellanox Technologies, Ltd. closed on Tuesday at $43.82.