SAN FRANCISCO, March 18, 2011 /PRNewswire/ -- Merriman Capital, Inc. ("Merriman") research analyst Alex Kurtz and derivatives strategist Joe Minton recommend a purchase of call options to institutions in EMC Corporation, a company with the largest portfolio in the storage space that is poised for strong growth in 2011 behind product refreshes in its core solutions coupled with new growth platforms.
The Merriman team recommends purchasing the October 26 level calls as EMC may see an increase in gross margins and an improvement in valuation on its core business, currently trading at approximately 10x CY11.
Merriman believes gross margins can approach the high-50s as growth products such as Avamar/Data Domain and Isilon could see 25-30% growth rates this year with gross margins approaching 65%, well ahead of its legacy storage solutions. Based on commentary from EMC channel partners and industry contacts, there appears to be growing momentum for V-Block deals (pre-integrated VMware, Cisco and EMC solutions), which creates share gain opportunities against Hewlett Packard and IBM. The Merriman team is bullish about EMC's product portfolio this year as it includes a new software upgrade for V-MAX, a MidRange refresh (VNX) and now Isilon and Greenplum-both greatly expanding the total addressable market for EMC.
Minton recommends a purchase of the October 26 level calls give large cap investors earnings upside and exposure to a take over, should one occur. The calls can be an inexpensive addition to a core position or used in out-right speculation. Small cap investors who would not normally play EMC will gain participation in the storage space which has few other investment alternatives.
Minton stated that for risk-averse investors, the cost of investment can be offset by selling a higher strike such as the October 32 level call, which would result in a $6 call spread with a 25% reduction in cost.
About Merriman Holdings, Inc.
Merriman Holdings, Inc. (NASDAQ: MERR) is a financial services firm focused on fast-growing companies and the institutions that invest in them. The company offers high-quality investment banking, equity research, institutional services and corporate & venture services. Merriman specializes in four industry growth sectors: Technology, Telecom, Consumer, Media & Internet and CleanTech Infrastructure. For more information, please go to http://www.merrimanco.com/. Merriman Capital, Inc. is a member of FINRA and SIPC.
The data this communication is based on, including but not limited to, market valuations, calculations and other material is derived from sources believed to be reliable, however, Merriman Capital, Inc. ("Merriman") does not guarantee its accuracy or completeness. Opinions, ratings and estimates constitute the judgment of Merriman and are subject to change without notice.
This document does not constitute, and should not be used or construed as an offer to sell or a solicitation of an offer to buy any securities. Past performance is not indicative of future results. Merriman and/or its employees 1) may have a financial interest in the securities of; 2) may have received or intend to seek compensation for investment banking services from; 3) may have performed other financial services for; and/or 4) may act as a market maker in the securities of, issuers of the underlying securities of the option strategies described herein.
Merriman Capital, Inc. is a member of FINRA and SIPC.
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