UPDATE: Morgan Stanley Upgrades II-VI, Inc. (IIVI) to Overweight

Morgan Stanley analyst Meta Marshall upgraded II-VI, Inc. (NASDAQ: IIVI) from Equalweight to Overweight with a price target of $82.00 (from $80.00).

The analyst comments "Valuation not reflecting name is nearing end of de-risking. We are upgrading IIVI to OW (from EW) as we believe pullback in valuation over the last year (down ~12% YTD and ~26% since initial COHR announcement) and current multiple (~17-18x CY23 P/E) is too pessimistic around COHR transaction risks as well as recent 3D sensing results. We believe it misses earnings potential of core business, particularly in the midst of a datacomm upgrade cycle. Investor concerns around the transaction have set the name back ~26% since the initial bid announcement, primarily around integration concern, price paid and where COHR is in their cycle. We continue to think the acquisition is a positive for IIVI given diversification away from datacomm, and feel less cautious around integration given confidence in management team. Overall, we think IIVI is nearing the end of de-risking in the name given transaction appears to be closer to closing, and achievement of COHR synergies should be a catalyst to re-rating in the stock. We also see potential tailwinds in SiC business, regaining 3D sensing share and a largely healthy telco and datacomm market (as CIEN & ANET results point to) leave plenty of opportunity for upside in the name. Risks to our call would be continued 3D sensing share losses or headwinds to COHR results, pushing out synergy targets."

For an analyst ratings summary and ratings history on II-VI, Inc. click here. For more ratings news on II-VI, Inc. click here.

Shares of II-VI, Inc. closed at $64.86 yesterday.

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