Brocade Communications Lifts Outlook

From JPMorgan. October Outlook Lifted, but Foundry Overhang Persists; Adj. Ests.; Earlier today, Brocade revised upward its revenue and EPS expectations for the October quarter. Despite being a near-term positive catalyst, we find it unlikely the news will put the stock back on track to a sustainable path of appreciation. We continue to believe Brocade offers a high level of relative downside protection owing to its networked storage focus and stable gross margins, but a lack of clarity around the Foundry deal is likely to cap appreciation in the near to mid term.