Shares of Costa Mesa-based Emulex Corp., a maker of electronics for data storage networks, jumped in midday New York trading Monday after the stock was upgraded by an analyst.
The stock rose more than 7% at close of trading on a recent market value of about $1 billion after Citigroup Inc. analyst Paul Mansky upped his rating on Emulex to “buy” from “sell.”
He also raised his price target to $16 per share from $10.
Emulex was trading at around $14 per share on Monday with a market value of about $1 billion.
Mansky said Emulex is set to see some improvement as it sells down its inventory of host bus adapters, a profitable bit of electronics that are sold to top makers of servers.
He also expects the company to grow its market share for a newer storage technology called blade servers, which combine multiple circuit boards,each acting as a server,into one slim box.
Other investors may have been encouraged by Emulex’s announcement last week that it’s set to do a $140 million stock buyback during the current quarter.
Repurchasing stock is looked on favorably by Wall Street because it boosts analysts’ favorite number, profits expressed on a per share basis.
The news may be a bit of relief for Emulex, which saw its shares slump last week after it gave an outlook for the current quarter that fell short of analysts’ expectations.
Emulex is expecting revenue of $108 million to $111 million, falling short of the $111 million analysts’ had been looking for.
Excluding one-time charges, it’s looking for September quarter profits of $15 million to $17 million. Analysts are expecting $19 million in profits.
