[Briefing.com]
CacheFlow (CFLO) 94 15/16 +12 7/16: CFLO shares are up 15% today thanks to positive comments out of Credit Suisse First Boston Analyst, Amit Chopra. The $125 price target that Chopra assigned to the shares represents over 50% upside and his BUY rating reflects an optimistic outlook for the caching market. The call couldn't have come at a better time for CFLO as Network Appliance (NTAP 85 -5 3/4) yesterday reported a slowdown in caching appliance sales, and without the BUY reiteration and aggressive price target, CFLO shares probably would have traded down in sympathy. The call also precedes CFLO's expected earnings announcement tomorrow after market close. Chopra expects upside to the consensus estimate of ($0.17) as well as upside to his estimate of 35% sequential revenue growth (35% seq. rev. growth would equal about $17.3 mln). Growing Internet usage demands faster, more efficient delivery methods, caching addresses this need. The caching market is expected to reach at least $1.6 billion in 2003 from $179.3 million in 1999 (Source: Bear Stearns). CFLO's intelligent caching appliances hold competitive advantages for efficiency, security, ease of installation and administration. In tomorrow's release, look for a narrower-than-expected loss (First Call is -$0.17), revenues over $17.5 mln as a benchmark, and gross margins to improve to 62.3%-63% from Q4's 62.0%. Given that CFLO shares are up about 30% in the past five days, a "sell the news" reaction to a good quarter is possible, but despite the volatility of the shares, we remain believers in the long-term success of CacheFlow. |
