© Reuters. CommScope (COMM) Upgraded at Credit Suisse as Demand Not Abating
By Sam Boughedda
Shares of CommScope (NASDAQ:) jumped over 15% Tuesday after the company was upgraded to Outperform from Neutral at Credit Suisse.
The firm also raised its price target for the stock to $17 from $11 per share, stating that business demand is likely not abating for CommScope.
“We anticipate COMM to be indexed to multi-year tailwinds in its core product segments. When combining the dollar amounts of announced government programs, we find that ~$2.2B/year will be made available over each of the next 5 years for broadband infrastructure equipment providers. We conclude that COMM is likely the key multi-year beneficiary of this funding due to their product set relevance to broadband projects,” Credit Suisse explained.
The investment bank also stated that its sector channel checks with private CommScope competitors are also seeing similar high demand dynamics, including better pricing.
“Further, most segments have been heavily supply constrained, limiting shipments versus bookings, a trend we believe can be overturned in FY23 as supply chain pressures abate as decreasing consumer,” Credit Suisse added. “For this reason, we grow more confident in COMM’s revenue forecast, projecting revenue growth of +3.4%/+4.7% in FY23/24, with earnings growth of +42.4%/24.5% (better margins, less interest expense, easing supply chains aiding profitability), respectively, ahead of consensus forecasts.”
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