FBN Securities retained its "Outperform" rating on Dot Hill Systems Corp. (NASDAQ:HILL), while lowering its price target on the stock to $1.85 from $1.90.
Shebly Seyrafi, an analyst at FBN, said the revision of price target reflects HILL's negative fourth-quarter preannouncement and the company's inability to succeed with its Cloverlead host virtualization software efforts.
Still, Seyrafi thinks that the "Outperform" rating is indicated as HILL will be ramping its midrange business mid-summer, HILL is currently at a trough with respect to HDD availability and tier-2 OEMs are growing well.
For the fourth quarter, HILL preannounced revenue of around $48 versus prior guidance of $47 million -$53 million and NG EPS of -.02 to -$.03 versus prior guidance of $-$.03 to +$.03). The primary reason for the revenue shortfall is fallout from HDD shortages due to the Thailand floods, Seyrafi noted.
"However, HILL is noting an improving HDD environment (we agree), so in the June quarter revenue should bounce back," Seyrafi wrote.
On Tuesday, the stock fell 3.1% to $1.56 in early trade.