Brocade To Be Acquired? Don’t Hold Your Breath, S&P Says

That story in the WSJ a couple of weeks ago about Brocade (BRCD) shopping for a buyer so far has not played out, although it has given a nice boost to the company’s shares. But there’s a growing camp on the Street that isn’t convinced a deal will happen any time soon.

Jim Yin, an equity analyst with Standard & Poor’s, today cut his rating to Hold from Buy, noting that the stock (with no small lift from the Journal) has gotten within 5% of his $10 price target.

“While we think BRCD could receive an attractive takeout offer after the company has put itself up for sale,” he writes, “we think significant risks exist that such an offer may take longer than anticipated.” Yin adds that he is also concerned about a sluggish recovery in enterprise IT spending, and about increased competition from Cisco (CSCO), “as customers prefer fewer vendors that provide more comprehensive solutions.”

BRCD today is off 6 cents, or 0.6%, to $9.53.

Previously: Brocade: Seeing No Deal, Oppenheimer Downgrades (October 12, 2009)