COMM - CommScope Holding slips as Morgan Stanley downgrades after 50% gain in shares

CommScope Holding ( NASDAQ: COMM ) shares slipped on Friday as investment Morgan Stanley downgraded the stock, citing the recent 50% move higher, as well as worries over the supply chain and debt repayment.

Analyst Meta Marshall lowered his rating on CommScope Holding ( COMM ) to equal weight from overweight, but raised the price target to $11 from $9, noting that the fiber optic cable company has largely benefit over the past two quarters from investments in higher speed networks, especially via its NEXT initiatives.

The analyst noted that while there is a "long way to go" to see the impact of pricing changes from NEXT and the fact that the company will work to reduce leverage and supply chain constraints may ease in the second-half of the year, much of it is likely already factored into the stock.

"However, we think much of this demand /pricing commentary was captured in the recent ~50% move over past month (vs. peers closer to ~15%), with the next leg of meaningful appreciation requiring moves to generate cash and pay down debt, and hence we are moving to [equal weight,]" Marshall wrote in a note to clients.

CommScope Holding ( COMM ) shares fell nearly 2.5% to $9.59 in premarket trading.

The analyst added that the outlook for 2023 could become better when the company next reports, but it's likely that any impact to the stock would be limited and investors should be"looking to capture appreciation for now."

CommScope Holding ( COMM ) reported second-quarter results on Thursday that topped estimates .

Analysts are largely cautious on CommScope ( COMM ). It had an average rating of HOLD from Seeking Alpha authors , while Wall Street analysts rate it a HOLD . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates COMM a BUY .

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