QLogic shares rose last week after Summit Research's Srini Nandury, lifted the company to Buy and hiked his target by $2 to $13: "Qlogic has pulled back significantly from early June highs (down 37% versus S&P of down 4%) after the company preannounced an earnings shortfall. We believe Qlogic kitchen-sinked estimates and we are optimistic the company will at least meet (likely beat) the lowered bar for the year, which is enough for the stock to work."
He adds QLogic's core Fibre Channel connectivity market (under pressure recently) is "fairly stable," and expects seasonality, Intel's Grantley server CPU platform, cost cuts, and buybacks to support estimates. "In addition, any improvement in Ethernet business will also aid the stock given that the company inherited a fairly robust portfolio from Broadcom ... Finally, gross margin improvement in its Ethernet business due to manufacturing consolidation and design for costs and operational improvements should at least contribute 800-1200bps improvement in Ethernet margins (with part of the improvement showing in F2016). "
The upgrade comes 10 days after QLogic announced Prasad Rampalli has resigned as CEO, and that CFO Jean Hu will serve as acting CEO.