"I like QLogic as a key player in the SAN space over the next few years," says Kevin Hunt, an analyst with Thomas Weisel Partners. Hunt, who reduced QLogic earnings estimates for the most recent quarter (due to the slowdown related to the Sept. 11 terrorist attacks), rates the firm a Buy with a target price of $36 per share.
"The company is well diversified from a product standpoint, it is a low-cost producer, and it remains ahead of the curve on new technologies like Infiniband and iSCSI," Hunt says. "The valuation had been looking pretty attractive, although a bit less so after the huge move [earlier this week]."
This week's market upswing has boosted QLogic's stock by about 50 percent. Shares moved from a close on Monday of $17.99 to flirtations with $28 per share in trading Friday. Still, that's far below the $60 per-share range QLogic had during the summer, and it's well below the 52-week high of $132.50 per share it held last year.
Part of the problem may be that investors have a tough time getting a handle on where the company's srengths lie. This perception problem may be related to its diverse product line, which also includes controller silicon and other SAN device chips, as well as SAN management software.
QLogic sells most of its products to large-system OEMs, including Fujitsu Ltd. (KLS: FUJI.KL), IBM Corp. (NYSE: IBM), Dell Computer Corp. (Nasdaq: DELL), and Sun Microsystems Inc. (Nasdaq: SUNW).
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