An analyst initiated coverage of Stec Inc. with a "buy," his highest rating, saying it is a leader in a fast-growing segment of the information technology industry.
The market for solid-state drives for businesses is in the early stages of a recovery, said Broadpoint AmTech analyst Dinesh Moorjani in a note to investors Tuesday. He sees overall enterprise sales growing from $246 million this year to $1.4 billion in 2013.
Sold-state drives are data storage devices. Moorjani said Stec's ZeusIOPS product for businesses is the industry leader. It made up 62 percent of Stec's third-quarter sales.
In 2010, he expects company sales to increase 20.5 percent to $422 million. Analysts polled by Thomson Reuters see 2010 revenue of $423.1 million, on average.
Meanwhile, Stec shares have fallen by 67 percent since a September high, Moorjani said, partly because of worries over competition. The pullback means it's a good time for investors to build positions, he said.
Moorjani said he thinks Stec will have a "first-mover advantage" for longer than he said the market expects. He doesn't see any material impact from rivals in 2010 as producers of enterprise solid-state drives.
Shares of Stec rose 78 cents, or 5.6 percent, to $14.73 in afternoon trading Tuesday. Moorjani set a price target of $23 on the shares.