Bank of America Merrill Lynch Underperform on Blue Coat Systems

Bank of America Merrill Lynch is out with a research report on Blue Coat Systems, Inc

and it has an Underperform rating and a $17 price target on shares. In a note to clients, Bank of America Merrill Lynch writes, "2Q sales/EPS of $114mn/$0.20 beat our and Street's estimates of ~$107mn/$0.13. Revenue guidance of $113-120mn was also above our $109.4mn and Street's $108.3mn estimate, and EPS guidance of $0.19-0.26 was also above our $0.18 and Street's $0.15. Results drive an upward revision of our FY12E/FY13E estimates from $0.66/$0.93 to $0.82/$1.06, and we adjust our PO accordingly to $17 from $13. We highlight some positives, mostly in the context of some stabilization, easy comps and reduced expectations. However, we maintain our Underperform, as we believe Blue Coat's fundamental position is weak, and note that without a 300% QoQ growth in Federal revenues, revenues would have fallen 6% QoQ." Shares of BCSI are up $1.31 to $18.22 in early Friday trading.