Wunderlich Reiterates Buy and PT of $8 on Brocade Communications Systems (BRCD)

Wunderlich Securities reiterated its Buy rating on Brocade Communications Systems (NASDAQ: BRCD). At the same time, Wunderlich left its price target unchanged at $8. In a research report published today, Wunderlich stressed that even though it left its rating and price target untouched, it has a positive bias on Brocade.

In the report, Wunderlich states, "Brocade (BRCD) reports its 2Q11 on Thursday after the market closes. The April quarter is seasonally the weakest for BRCD, but guidance was surprisingly strong with record OEM channel sell through. While federal Ethernet sales only represent about 7% of overall BRCD revenue, we believe it has a disproportionate effect on expectations. Federal margins are high relative to other Ethernet business and demand is a macro concern, especially since the government did not have a budget until there were only three weeks left in 2Q11. No change to our forecast, $8 target, or Buy rating, but we regard our 2H11E with a positive bias due to the seasoning of BRCD's sales force and product initiatives."

On Monday, Brocade lost 2.7% to close the day at $6.13.