Emulex Rebounds a Bit After Setback Over Downgrade

Shares of Emulex Corp., battered this week when an analyst downgraded the stock, gained 8% Thursday after a second analyst recommended that investors buy the stock of the Costa Mesa supplier of network-access products.

Emulex rose $9.44 a share to close at $131.13 in heavy trading. The number of shares changing hands was more than four times the average daily number for the past three months.

The stock is still much lower than the 52-week high of $218.06 a share reached Monday.

On Tuesday, Morgan Keegan & Co. analyst Robert Montague cut his rating on Emulex. He said he believed that growth in the fibre channel data storage sector would be driven by the Windows NT market rather than the UNIX market, where Emulex derives a substantial amount of its revenue.

But Chase H&Q; analyst William A. Lewis initiated coverage of Emulex with a “buy” rating Thursday, saying he felt UNIX, not Windows, would drive sector growth.

In his report, Lewis said Emulex is the market-share leader in certain fibre channel products for networks targeting both UNIX and Windows. Because the stock had dropped “45% from its recent highs,” Lewis said, the lower price made the stock a buying opportunity.