) to market perform from underperform.
Analyst Les Santiago says demand for product line appears to be as expected with strength in director products, multiprotocol router, and blade server products. He says first-quarter gross margins were well above his estimate and guidance.
He notes the company benefited from a ramp in its lower-cost refreshed products, a higher mix of director revenues, and stable average selling prices. He believes the company seems to be executing to plan, and appears to be ahead of operating goals for calendar year 2005.
He says his valuation methodology suggests a target in the range of $5.39 to $8.66. He ups his target to $6 and the low-end of the range given the overhang of an SEC inquiry.