LSI To See Continued Strength In Demand Across PC, Server And Networking Positions
Analyst Suji De Silva of Kaufman Brothers upgrades LSI Corporation (NYSE: LSI) from "hold" to "buy." The target price for LSI has been raised from $5.50 to $8.00.
LSI has revised its 1Q10 revenue guidance to $620 million-$640 million (flat to down 3% Q/Q), from $590 million-$620 million (decline 3%-7%Q/Q). The company has also raised its EPS guidance to $0.07-$0.11 (versus prior $0.04-$0.10) as it is expecting better-than-expected gross margins of 47%. Kaufman Brothers believes that “LSI is seeing broad-based strength in orders across enterprise storage, hard drives and networking and has improving visibility into 2Q10 from healthy order patterns." We believe continued demand strength across PC, server and networking positions LSI for a series of strong quarters through 2010,” the analysts say.
According to Kaufman Brothers, “For the last few years, LSI has been a turnaround story. We believe that story is entering a new leg of growth starting in 2010, driven by a robust design win pipeline that is the result of retooled product lines and increased sales focus… We believe LSI can drive growth at or above our current 2011 revenue estimate of +8% Y/Y given the ramp opportunities from recently announced wins. We also see upside in operating margin estimates given both gross margin upside as hard drive revenues scale as well as continued operating leverage.”
Kaufman Brothers has raised its EPS estimates for 2010 from $0.37 to $0.42.
