photo credit: S&P:EMC Corporation (EMC: $20) has been picked by Standard & Poor’s Equity Research as its Focus Stock of the Week. EMC carries S&P’s highest investment recommendation of 5-STARS, or Strong Buy.
“We believe EMC will be a main beneficiary of two major trends we see occurring in the enterprise IT landscape,” said Jim Yin, Computer Storage Equity Analyst at Standard & Poor’s Equity Research. “First, the amount of data that enterprises store continues to grow at a phenomenal pace. We expect the total disk storage capacity shipped in 2010 to increase 50% after rising only 21% in 2009. While most of the rebound is due to an improving economy, we believe several long-term trends are also driving demand. Companies continue to replace outdated business and storage processes. As a result, more records and information are being converted into electronic files, which is becoming more prevalent in several industries, including media, entertainment, and health care. We also believe demand for data storage will be boosted by regulatory compliance issues such as those in the financial industry requiring companies to retain more electronic documents for longer periods.”
The second major trend Yin sees in the enterprise IT area is the worsening of problems confronting companies in operating their data centers. He says many companies have simply run out of space in their data centers due to the rapid growth in the number of servers and data storage systems. Another issue he points to is rising energy costs, which typically account for 30%-40% of the expenses in an operating center. As a result, he says the cost of operating data centers has become an increasingly larger portion of companies’ total IT expenditures.
“These two trends should drive demand for EMC’s products,” said Mr. Yin. “EMC is the largest supplier of enterprise data storage. EMC has also bolstered its software portfolio with the acquisition of Data Domain, a provider of backup and archive solutions based on de-duplication technology.”
