(COMTEX) B: U.S. Bancorp Piper Jaffray Initiates Coverage of BRCD wit
B: U.S. Bancorp Piper Jaffray Initiates Coverage of BRCD with a Buy Rating and
$275 Price Target
MENLO PARK, Calif., Feb 17, 2000 (BUSINESS WIRE) -- Feb. 17, 2000-U.S.
Bancorp Piper Jaffray Managing Director and Senior Computer Hardware
and Semiconductor Analyst Ashok Kumar, today initiated coverage of
Brocade Communications Systems, Inc. (BRCD--$233 1/2, (a)) with a Buy
rating and 12-month price target of $275, based on a multiple of 50
times estimated calendar 2001 revenues of $292.1 million. The company
develops and markets Fibre Channel (FC) switches and network software
that connect computers with storage devices, such as disk drives and
tape drives.
"In our view, Brocade is one of the best-positioned companies to emerge
as a principal FC switch vendor, having demonstrated its capability by
capturing 70 to 80 percent of the major OEM business in the second
product round," said Kumar. "In addition, we believe Brocade possesses
the most balanced corporate effort, as the company continues to execute
well on its development programs and maintains its technical lead in
storage-interconnect implementations. We believe the company has a
substantial, but not unfair, advantage with its sales and marketing
skills, its understanding of the overall market, and its dedicated and
superior execution-oriented management. We believe that it was
primarily these initiatives that drove its initial success."
"Notwithstanding the proceeding, we believe Brocade faces three
immediate challenges," said Kumar. "First is the company's ability to
grow with market demand that appears to be as high as 50 percent per
quarter. Thus, the company is faced with the challenge of putting into
place additional infrastructure to complement its OEM partners.
Secondly, on the hardware front, the company needs to execute
flawlessly on its roadmap to maintain technology parity with Ancor
Communications (ANCR-(a)) and McData, or risk losing share. Lastly, we
believe interoperability standards for storage hardware, network
components and software are still under development. There is also a
real potential that Brocade, as well as the other participants in the
FC space, will eventually be impacted by IP-based solutions."
For more information, visit our Web site at www.piperjaffray.com.
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