QLGC Estimates Down, But ThinkEquity Optimistic About Margins, FCF

Analysts at ThinkEquity reiterate their “buy” rating on QLogic Corporation (NASDAQ: QLGC), while reducing their estimates for the company.

The recent pre-announcements point to QLogic’s HBA share loss to Emulex Corp (NYSE: ELX). The analysts say, however, that the operating leverage in QLGC's model is impressive. This is likely to enable the company to achieve record operating margins and FCF. The analysts believe that QLGC is poised to benefit from the server refresh cycle garnering momentum and improving HBA demand, with the 8-core Nehalem EX scheduled for later this quarter.

ThinkEquity has reduced its EPS estimates for FY10 and FY11 from $1.00 to $0.99 and from $1.36 to $1.32, respectively.

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