(Reuters) - ThinkEquity downgraded data-storage and networking products company Brocade Communications Systems Inc to “hold,” citing uncertainty in the management and increasing competition.
The brokerage said the departure of Ian Whiting, Brocade’s senior vice president for worldwide sales, may be a sign that the company is in the middle of a shift in its sales strategy, which allowed for little visibility into its near-term results.
Analysts at ThinkEquity also said that the uncertain state of the global market — especially Europe, from where Brocade gets about a quarter of its revenue, may compound problems for the company.
“We fear the transition from Mr. Whiting’s leadership could usher in a period of uncertainty in the BRCD employee base which could potentially be disruptive in the near-term amidst signs that the global economy continues to weaken,” ThinkEquity said in a research note.
The brokerage, which expects Brocade to face stiff competition in the ethernet market from rivals like Cisco Systems Inc, cut its price target on the stock to $5 from $6.5.
The company’s shares, which fell more than 7 percent to $4.18 on the Nasdaq on Tuesday morning, were later down 3 percent.
Reporting by Shubham Singhal in Bangalore; Editing by Joyjeet Das