Quantum Corporation Surges 13% On Positive Q2 Revenue

Quantum Corporation QTM shares surged over 13 percent in the premarket Tuesday on the company’s positive preliminary numbers for Q2.

Lake Street Capital had upgraded its rating on the company to Buy at the end of June and analyst Eric Martinuzzi commented that his “faith was well-placed” and that “revenue of $135 million, while not a rocket ship of growth, was a positive comp for the first time in many quarters.”

Martinuzzi noted that “Quantum is managing a business in secular decline – tape automation systems – at the same time it is investing for growth in disk systems and scale-out products. In FY15 we expect stabilization in disk systems and tape and growth in scale-out products.”

Lake Street maintained a $1.50 price target and has used a 0.9x EV/CY 2015 Revenue multiple.

Martinuzzi concluded that for Quantum to be successful,  “it must increase the percent of revenue that comes from its disk and scale-out product segments,” which is currently 25 percent.

Quantum Corporation traded at $1.16 in the premarket, up 13.73 percent.