Citigroup called shares of Aliso Viejo-based QLogic Corp. a “buy,” saying Tuesday’s 6% drop in the stock was “backward-looking.”
Earlier this week, QLogic said it planned to sell its slumping unit that makes controllers,circuit boards with chips,for disk drives for $225 million to Silicon Valley’s Marvell Technology Group Ltd.
A day later, analysts at Piper Jaffray and Robert W. Baird & Co. cut their ratings on QLogic saying the price undervalues the unit and suggests it is worse off than thought.
Japan’s Hitatchi Ltd., one of QLogic’s two biggest buyers of controllers, has seen volatility, according to analysts.
QLogic’s main business is adapters and other electronics for storage area networks.
Citigroup said QLogic is likely to see higher operating expenses as a percent of sales after shedding the unit.
But the investment bank said the selloff in QLogic shares was “backward-looking given that the controller business itself represented a greater source of risk related to both estimates and multiples over the coming years.”
QLogic shares were up about 2.7% in trading Wednesday.
