SAN FRANCISCO Citing a ramping product cycle in serial attached SCSI (SAS) systems and cost savings associated with its pending merger with Agere Systems Inc., analyst Craig Berger of Wedbush Morgan Securities upgraded his firm's rating on LSI Logic Corp.'s stock to "buy" from "hold" Monday (Feb. 26).
In a research note, Berger said cost savings associated with the Agere merger, first announced Dec. 4, would likely exceed the $125 million estimated by the companies.
Berger wrote that Wedbush believes LSI is in the early stages of a SAS product cycle in offerings for chips as well as systems from its Engenio Information Technologies Inc. storage subsidiary. "We believe that LSI will ramp its storage system array products with most or all of the top five server OEMs, including IBM, Sun Micro, Dell and Hewlett-Packard, thus contributing to meaningful growth," Berger wrote.
Berger wrote that Wedbush believes a "rising tide" of fundamentals will "lift all boats," including LSI, by the end of 2007. In addition to raising its rating, Berger increased Wedbush's 2008 earnings-per-share estimate for LSI to 73 cents per share from 70, and upped the securities price target to $13 from $10.
LSI traded at $10.18 in late afternoon Nasdaq trading Monday, up 4 percent from Friday's close.