AVYA - Morgan Stanley lifts view on networking equipment sector; LITE stock +6.5% on upgrade to Overweight

Morgan Stanley has raised its view on U.S. telecom/networking equipment companies, expecting a potential return to offices in 2021 spurring some network upgrades. The firm's Meta Marshall and team have raised their view on the sector to In Line from Cautious. Supply and demand should normalize through a number of spending cycles, including 5G buildouts, a return to campus network investment, and upgrades of optical/networking equipment by hyperscale customers, they say. Morgan Stanley is upgrading Lumentum (LITE +6.5%) to Overweight in the report, from Equal Weight, and raising its target to $105 from $92 (now implying 12% upside, accounting for today's strong gain). Lumentum joins the other names the firm rates at Overweight in the sector: Cisco Systems (CSCO +1.1%), Arista Networks (ANET +1.9%), F5 Networks (FFIV +2.3%), and CommScope (COMM +1.3%). There's opportunity for valuation particularly as the businesses' software units step up (especially for Cisco, Arista and F5),

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Morgan Stanley lifts view on networking equipment sector; LITE stock +6.5% on upgrade to Overweight