UPDATE: Raymond James Downgrades CommScope Holding (COMM) to Underperform

(Updated - April 11, 2022 5:32 AM EDT)

Raymond James analyst Simon Leopold downgraded CommScope Holding (NASDAQ: COMM) from Market Perform to Underperform.

The analyst comments "We downgrade our rating on CommScope to Underperform from Market Perform ahead of 1Q22 results. Our opinion change does not reflect a call on the quarter; we expect sales above consensus with EPS in line with expectations. However, we expect full year earnings miss consensus. We consider CommScope a good company; management has a plan, yet it faces challenges with increasing input costs, and we worry that aggressive cost cuts could protect cash flow, yet jeopardize its future. Without incremental cost cuts, CommScope can cover interest expenses, but will disappoint on EPS. It could face challenges in 2025 and 2026 repaying debt. We are making a relative call on the stock. Overall demand trends sound healthy across core CommScope and backlog is strong; the book-to-bill at the end of 2021 stood at 1.3x. High leverage burdens the valuation; the 2023 P/E ratio appears low, below 5x, but with EV/EBITDA above 8x, which is within the historic range of 8-9x, this does not make the shares inexpensive enough, in our view, to take the risk."

For an analyst ratings summary and ratings history on CommScope Holding click here. For more ratings news on CommScope Holding click here.

Shares of CommScope Holding closed at $6.87 yesterday.

You May Also Be Interested In

• Piper Sandler Downgrades Independent Bank Group (IBTX) to Underweight, 'Expectations of Slower NII Recovery'
• Piper Sandler Starts Kura Sushi USA Inc. (KRUS) at Neutral, 'Risk Reward as relatively balanced'
• Citi Upgrades Sirius XM Radio (SIRI) to Neutral, 'risk-reward is balanced at prevailing levels'