QLogic Corporation (NASDAQ: QLGC) provides
the controller chips, host adapters, fabric switches and management software used by storage area networks. Products include fiber channel and iSCSI host bus adapters, InfiniBand host channel adapters, fiber channel switches, InfiniBand switches, and storage routers for bridging fiber channel and iSCSI networks. Customers include Cisco Systems (NASDAQ: CSCO), Hewlett-Packard (NYSE: HPQ) and IBM (NYSE: IBM).
The firm pleased investors earlier in the week, when it boosted its fiscal Q1 EPS guidance from 26-28 cents to 30-31 cents and its Q1 revenue view from $154-$158 million to $166-$168 million. The new ranges topped consensus Street estimates of 27 cents and $156.40 million. Caris & Company subsequently improved its rating on the issue to "above average" and raised its price target to $18.
QLGC shares
popped on the news and then moved into a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Altogether, brokers now recommend the stock with two "strong buys", three "buys", nine "holds" and one "underperform". The QLGC Price to Book ratio (2.83), Price to Free Cash Flow ratio (10.34), Sales Growth rate (47.37%), Operating Margin (22.36%), Net Profit Margin (16.09%), Return on Assets (10.80%) and Return on Investment (12.00%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 91% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $11.46 and $17.97. A stop-loss of $13.40 looks good here. Note that QLogic is expected to report Q1 results on July 21st, after the close.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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