Weekly wireless ratings roundup

The following wireless companies had ratings changes or information notes from financial services and investment banking firms this week.

• Robert W. Baird made several changes within its telecom coverage universe following the Supercomm show this week in Chicago. In general, the firm said news out of the show indicates carrier spending is improving from lows in February, mostly on the wireline side. Wireline, wireless, MSO and VoIP carriers all are upgrading and expanding their networks, driving capex, said Baird. The company upgraded Adtran Inc. from neutral to outperform and raised its price target from $18 to $30 based on better-than-expected second-quarter revenue and earnings-per-share results. Baird also upgraded Lucent Technologies Inc. and Nortel Networks, along with a few other telecom companies, based on macro trends that could benefit those vendors some time this year. Baird noted “right-sizing” trends at Lucent and the end of financial reporting difficulties at Nortel Networks as additional reasons for the upgrades.

   

• Avondale partners reiterated its market outperform rating on Plantronics Inc., which offers Bluetooth headsets, among other products. Avondale noted its belief that 2005 will be the year that Bluetooth-enabled mobile phones go mainstream in the United States, which could have positive implications for Plantronics.

   

• CIBC World Markets initiated coverage of Brightpoint with a sector outperform rating in the speculative class with a 12- to 18-month price target of $24. CIBC said it expects the company’s logistics business to grow 13.5 percent this year due to exposure to mobile virtual network operator growth.

   

• Fitch Ratings said it expects to assign a BB rating to a proposed offering of senior unsecured notes by Qwest Corp. and a B+ rating to a proposed offering of senior notes guaranteed by Qwest Services Corp. In related action, Standard & Poor’s Ratings Services assigned a B rating to Qwest’s proposed offering.

   

• Piper Jaffray analysts slightly lowered expectations for Qualcomm Inc.’s third-quarter and full-year earnings and revenue estimates based on decelerating CDMA-based handset sales in Japan during the last two months as well as slower-than-expected ramp up in some emerging markets.

   

• Piper Jaffray adjusted its fiscal year 2005 earnings estimates slightly down on Sierra Wireless on news the company is discontinuing its Voq handset initiative. Piper Jaffray, however, noted it believes the move away from the Voq product line is the right decision for the company.

   

• Goldman Sachs raised its global handset forecast to 755 million units, up from an estimate of 740 million units, for the year. Goldman Sachs noted stronger-than-expected subscriber growth in most markets and stability in European and North American replacement activity. The firm pointed to Motorola Inc. as having the most product momentum heading into the second half of the year and adjusted its earnings estimates on the company up from $1.03 to $1.04 for fiscal year 2005 and from $1.11 to $1.15 for FY’06 to reflect its increased unit forecast as well as the expected benefit from Motorola’s share repurchase program. It maintained its in-line rating on the company.

   

• Bank of America affirmed its buy rating on Motorola, noting product advances in wireless as well as server and desktop product lines.

   

• Prudential Equity raised its price target for Texas Instruments to $33 and adjusted its earnings per share estimates up slightly on new guidance from the company. Prudential reiterated its overweight rating on the company.

   

• Standard & Poor’s Ratings Service affirmed its B+ corporate credit rating on Unova Inc., a global provider of supply chain solutions including wired and wireless automated data collection, radio frequency identification tags, mobile computing systems, bar code printers and label media. S&P also revised its outlook on the company to positive from stable, reflecting good revenue growth and an improved financial profile.

   

• UBS raised its rating on ADC Telecom from neutral to buy, citing an improved outlook for ADC’s connectivity products for this year and next year. UBS said it expects about 10-percent growth in that business, rather than the declines it previously had predicted. UBS said about 40 percent of copper connectivity business is wireless, which bolsters its confidence in the company.

   

• RBC Capital Markets initiated coverage on tower company Global Signal with an outperform rating in the speculative risk category and a $36 price target. RBC noted several factors for its rating, including the company’s discount vs. peers on the basis of EBITDA and OpFCF multiples; its improving revenue mix that reduces its exposure to the paging market; its potential to outperform estimates; significant recent insider buying that suggests management confidence in the company’s operating future; and the potential for a dividend increase.

   

• IRG Research downgraded its rating on SiRF Technology Holdings Inc. to neutral on valuation. The firm noted it likes SiRF’s long-term fundamentals and will monitor the stock for a more attractive entry point.

   

• Merrill Lynch downgraded SanDisk on anticipation of operating losses through the second half of this year.

   

• William Blair & Co. upgraded its rating on Intrado to outperform from market perform based on increasing shareholder pressure to improve capital allocation decisions and overall firm profitability.