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Three analyst reports this week see an improving data storage market in 2010, with EMC (NYSE: EMC) leading the way.
Broadpoint AmTech analyst Brian Marshall and Stifel Nicolaus analyst Aaron Rakers had good things to say about EMC, while Rakers and R.W. Baird analysts Jayson Noland and Sonya Banerjee issued upbeat outlooks for enterprise storage spending this year.
Marshall raised his fourth- and first-quarter estimates on EMC and set a $22 price target, saying, "We continue to believe solid upside exists in shares of EMC from current levels (20%+). We believe the strategic nature of the [VMware] asset cannot be overstated."
Marshall rates EMC shares a "buy."
Rakers upgraded EMC to a "buy," saying the data storage giant appears to have ended the year on a strong note. He also cited EMC's "strong competitive positioning for increased storage capacity deployments and a favorable enterprise data center upgrade cycle."
Analysts are looking for fourth-quarter earnings of 30 cents a share from EMC on flat sales of $4.02 billion, according to Thomson Reuters, and both Rakers and Marshall expect even better than that. EMC will report its quarterly results on Jan. 26.
Rakers also issued a positive overall outlook for the data storage sector, citing "resumption of capacity investments, some loosening of deferred data center projects, and the continued proliferation of virtualization and therefore networked storage in enterprises."
Rakers said he expects a flat first half of the year for the industry, followed by a strong second half, for an overall growth rate of about 10 percent. He said he doesn't expected to see big FCoE deployments this year, a view held by other analysts who expect the network convergence technology to begin to take off in 2011 or 2012.
In their quarterly survey of resellers, Noland and Banerjee called the fourth quarter "improved but not stellar," but said the first quarter was shaping up to be "very positive."
EMC, NetApp (NASDAQ: NTAP), Compellent (NYSE: CML) and VMware (NYSE: VMW) got the highest marks from the channel, while Dell (NASDAQ: DELL) and Sun (NASDAQ: JAVA) received the least favorable ratings. Cisco (NASDAQ: CSCO) and HP (NYSE: HPQ) stood out in the server market.
IBM's (NYSE: IBM) XIV storage line and startups GreenBytes and Axxana also received favorable mention in the survey, and virtual desktops are another growing trend.
"We enter the year with a positive bias for our list and IT spending in general," the Baird analysts wrote. "We expect cyclical hardware sectors to begin a fundamental recovery in 2010 driven by pent-up demand."
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