CommScope Holding (COMM – Research Report), the Communication Services sector company, was revisited by a Wall Street analyst on September 29. Analyst Tal Liani from Bank of America Securities reiterated the rating on the stock to a Buy and gave it a $10.50 price target.
Tal Liani has given his Buy rating to CommScope Holding due to a mix of factors. Liani identifies that the company’s stock has decreased by 58% YTD, underperforming compared to other networking companies. This decline is primarily attributed to uncertainties surrounding the company’s ability to settle its 2025 debt, which is currently valued at approximately $1.275 billion. Liani believes that the company can alleviate these uncertainties by selling its most likely monetizable asset, Ruckus, which is roughly valued at $1.3 billion to $1.5 billion. This move would enable the company to repay a portion of its 2026 secured debt and refinance its 2025 unsecured debt, relieving much of the near-term stock pressure.
Furthermore, Liani views Ruckus as CommScope’s most attractive asset, making up approximately 78% of NICS, which saw its total revenues increase by 9% in 2022. He also predicts an acceleration of growth to 16% in 2023. Liani suggests that, given the current market conditions and CommScope’s weak performance in the first half of 2023, selling a successful asset like Ruckus could be a viable alternative to expensive straight debt refinancing. Moreover, he notes that despite the negative growth rates of some of CommScope’s segments, the company is set to benefit from a $42.5 billion government-funded Broadband program, expected to be operational in the second half of 2024.
COMM’s price has also changed dramatically for the past six months – from $6.110 to $3.360, which is a -45.01% drop .
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CommScope Holding (COMM) Company Description:
CommScope Holding Co., Inc. engages in the provision of infrastructure solutions for communications networks. It operates through the Connectivity Solutions (CCS), and Mobility Solutions (CMS) segments. The CCS segment offers innovative fiber optic and copper cable and connectivity solutions for use in data centers and business enterprise, telecommunications, cable television, and residential broadband networks. The CMS segment includes integral building blocks for cellular base station sites and related connectivity; indoor, small cell and distributed antenna wireless systems; and wireless network backhaul planning and optimization products and services. The company was founded by Frank M. Drendel in 1976 and is headquartered in Hickory, NC.
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