Shares of Aliso Viejo-based QLogic Corp. were off slightly Friday after an analyst said the networking electronics maker faces slowing demand for its products from server makers.
Growth in near-term profits appears “limited” as server makers slow buying, Morgan Stanley’s Katy Huberty said.
She cut rating on QLogic’s shares to “equal weight” from “overweight,” suggesting clients should hold their QLogic stakes but not add to them.
QLogic was down less than 1% in afternoon New York trading with a recent market value of $1.9 billion.
Huberty cut her QLogic profit estimate for the 12 months through March to $141 million, down from an earlier projection of $143 million.
QLogic makes chips and circuit boards that speed the flow of data from servers to other computers.
Server customers include Hewlett-Packard Co., Dell Inc., EMC Corp. and IBM Corp.
The downgrade comes a week after another analyst upgraded QLogic and the company upped its own outlook for the recently ended quarter.
Last week, Paul Mansky of Canada’s Canaccord Genuity Inc. upped his QLogic rating to “buy” from “hold.”
Just before that, QLogic upped its profit forecast for the three months through September, saying it expects a profit of $34.9 million to $36 million.
That’s up from an earlier forecast of $31.6 million to $34.9 million.
Strong sales and lower operating expenses drove the higher outlook, according to Chief Executive H.K. Desai.
The company expects sales of $146 million to $147 million, which would be up 2% to 3% from the prior quarter.
Earlier, QLogic forecast a broader revenue range of $143 million to $147 million.
