Dot Hill Upgraded to Strong Buy - Analyst Blog

On Jul 6, 2013, Zacks Investment Research upgraded Dot Hill Systems Corp. ( HILL ) to a Zacks Rank #1 (Strong Buy).

With an impressive first quarter 2013 performance, better visibility for the upcoming quarters, growing need for advanced storage solutions to cope with the increasing demand for data generation and data sharing activities, product launches and expected growth in deal pipeline, this storage area network solutions provider is an attractive investment opportunity. The stock's return was 80.2% in the past one year. Dot Hill's shares set a new 52-week high on Jun 27.

Why the Upgrade?

On May 9, 2013, Dot Hill reported first quarter 2013 results with loss per share of 2 cents. The loss was narrower than the Zacks Consensus Estimate of 3 cents loss per share. Revenues fell 18.5% year over year but grew 1.0% sequentially to $48.5 million. An unexpected surge in demand from one of its telecom customers in the first quarter of 2012 led to an uneven year-over-year revenue comparison.

Dot Hill serves vertical markets such as media & entertainment, telecommunications, big data/data analytics, oil & gas, and digital image capture. The company believes that the telecommunications and media & entertainment markets continue to leverage from increasing data generated by smartphone users and film studios, respectively.

Considering the demand growth, the company's disciplined cost management and product ramp, Dot Hill expects higher revenue growth and non-GAAP EPS accretion in the second half of 2013 and further growth in 2014.

On May 7, 2013, Dot Hill announced the availability of its AssuredSAN and AssuredSAN Pro storage solutions that feature high-capacity 4 terabyte SAS hard disk drives. The newly offered storage arrays will be energy efficient and will allow its customers to reduce their cost-per-gigabyte. Apart from this, the storage arrays will have reduced downtime and lower maintenance and disposal cost.

Estimate Revision

There was no estimate revision in the past 30 days. But one estimate each for fiscal 2013 and 2014 moved up over the past 60 days. The Zacks Consensus Estimate for 2013 and 2014 are $0.00 and 14 cents, up 2 cents and 14 cents over the last 60 days.

Other Stocks to Consider:

Investors could also consider similar stocks that are doing well right now. These include Xyratex Ltd. ( XRTX ), carrying a Zacks Rank #1 (Strong Buy), and EMC Corp. ( EMC ) and NetApp Inc. ( NTAP ), carrying a Zacks Rank #2 (Buy).

EMC CORP -MASS (EMC): Free Stock Analysis Report

DOT HILL SYS CP (HILL): Free Stock Analysis Report

NETAPP INC (NTAP): Free Stock Analysis Report

XYRATEX LTD (XRTX): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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