COMM - CommScope pops as Credit Suisse upgrades citing 'multi-year tailwinds' ahead of it

CommScope Holding ( NASDAQ: COMM ) shares rose more than 10% on Tuesday as investment firm Credit Suisse upgraded the fiber optic cable company, noting it is likely going to benefit from "multi-year tailwinds" ahead of it.

Analyst Sami Badri upgraded his rating on CommScope Holding ( COMM ) shares to outperform from neutral, noting that government funding designed to improve broadband and connectivity infrastructure in the U.S. is likely to help the company.

"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," Badri wrote in a note to clients. "We conclude that COMM is likely the key multi-year beneficiary of this funding due to their product set relevance to broadband projects."

The analyst added that channel checks with CommScope Holding ( COMM ) competitors also show "similar high demand dynamics," including better pricing.

As such, it's likely that CommScope Holding ( COMM ) is able to generate 3.4% and 4.7% revenue growth in fiscal 2023 and 2024, with earnings growth of 42.4% and 24.5%, respectively.

The company is also working to pay down debt thanks to lower cash outlays and should pay down roughly $500M in fiscal 2023, Badri added.

In August, investment Morgan Stanley downgraded CommScope Holding ( COMM ), citing a sharp move higher in the stock and worries over the supply chain and debt repayment .

Analysts are mostly cautious on CommScope Holding ( COMM ). It has a HOLD rating 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 STRONG BUY .

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