Blue Coat Systems jumps on growth prospects

Shares of Blue Coat Systems Inc. jumped on Monday as analysts issued upbeat comments about the network security company's integration of recently purchased Packeteer Inc.

ThinkPanmure analyst Jonathan Ruykhaver upgraded the stock to "Buy" from a "Source of Funds" rating Monday. The "Source of Funds" rating means the stock is expected to decline as much as 20 percent over the next 12 months, while a "Buy" rating means the stock could gain 20 percent or more over the same time period.

"We believe that management's guidance about flat U.S. growth in (fiscal) 2009 could prove to be very conservative, Ruykhaver wrote in a note to investors. "Our contacts tell us that longer-term, they are excited about the integrated Blue Coat-Packeteer offerings due out in early 2009."

The analyst added he thinks Blue Coat's shares are oversold, caused by the lack of short-term visibility into integrating Packeteer.

"We believe this is a good opportunity to buy, considering the longer-term prospects created by the integration and the conservative guidance," he wrote.

Blue Coat struck a deal to buy Packeteer for about $268 million, or $7.10 per share, in April. The deal closed June 6.

Pacific Crest analyst Rob Owens also upgraded the company, to "Outperform" from "Sector Perform."

"Patient investors who buy shares at current levels are likely to be rewarded over the coming year," he wrote in a note to investors.

The company's shares rose $1, or 7.1 percent, to close at $15.04. The stock has traded in a 52-week range of $11.85 and $53.37.