Next Generation Downgrades Black Box (BBOX) to Neutral

July 21, 2009 1:46 PM EDT

Next Generation downgrades Black Box (Nasdaq: BBOX) from Buy to Neutral. Price target lowered from $36 to $30.

Next Gen analyst says, "We are downgrading shares of Black Box this morning and cutting out price target to $30 after news that Nortel (NYSE: NT) agreed to sell their Enterprise Solution Business to Avaya for $475m. While the sale is not final it greatly increases the chances that Avaya will eventually acquire this business. In late 2007 Avaya terminated their reseller agreement with Black Box and decided to take the sales and service business "in-house". Our concern is that if Avaya acquires Nortel's Enterprise Solutions Business they will eventually terminate the existing agreement Nortel has with Black Box and take all of the sales and service "in-house".

"Nortel product currently accounts for 30% of Black Box's revenue. As a result we are maintaining our EPS estimates but lowering our earnings multiple to account for the greater risk associated with outcome of this transaction."

To see more analyst ratings on BBOX Click Here.

Black Box Corporation provides network infrastructure services for communication systems.

Related Categories

Downgrades

Stocks Mentioned

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?