Analyst upgrades Brocade, predicts it could win market share as rivals digest acquisitions

Ahead of the Bell: Brocade upgraded

PHILADELPHIA — Shares of Brocade Communications Systems Inc. edged higher in premarket trading Monday after an analyst upgraded the company, saying it could win market share as its rivals try to digest recent acquisitions.

Oppenheimer analyst Ittai Kidron raised his rating on the networking equipment maker to “Outperform” from “Perform” and set a price target of $8.50.

He said Brocade stands to benefit from the distraction from Hewlett Packard Co.’s purchase of 3Com and Avaya Inc.’s acquisition of Nortel’s enterprise business.

Kidron added that Brocade’s contracts to sell IP/Ethernet products to IBM Corp. and Dell Inc. will help the business over a longer term.

Moreover, Brocade generates strong free cash flow from a “stable” business, and is trading below normal levels, the analyst said.

Brocade shares added 20 cents, or 2.8 percent, to $7.24 ahead of Monday’s market open.