Markets & Finance

Morgan Stanley Rolls Back JDS Estimates


Morgan Stanley cut the estimate and target price on JDS Uniphase (JDSU) but maintained its outperform rating.

Analyst David Jackson says he cut the $0.65 fiscal 2001 (June) EPS estimate to $0.62, and lowered the $0.64 fiscal 2002 estimate to $0.60. He also reduced the calendar Q1 gross margin estimate by 250 points to 45.5%. He thinks prices of passive optical components will continue to decline, and notes that industry contacts say pricing pressure on thin-film-filter-based products has worsened.

However, Jackson would buy JDS at current levels. He says his DCF analysis implies fair value of $30, and the relative price-earnings-to-growth analysis implies the price is significantly higher. Therefore, Jackson lowered the $50 target to $30.


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