Friedman Billings upgrades Network Appliance (NTAP) to outperform from market perform.
Analyst Clay Sumner says his upgrade is based not on upcoming third-quarter results, but on two other principal factors. First, his industry checks and surveys, which indicate that demand for the company's primary products should increase over next three quarters.
Secondly, his belief that Hewlett Packard's mid-range storage competitive position is likely to weaken through at least in the April and July quarters. As noted earlier, he expects third-quarter results to be generally in-line.
Therefore, with no significant outperformance in the third quarter, his upgrade is based on a view of improving prospects for fiscal 2006 (ending April).