Banc of America upgraded Ciena (CIEN) Cisco Systems (CSCO), Juniper Networks (JNPR), and Oni Systems (ONIS) to strong buy; and upgraded Advanced Fibre Communications (AFCI), Lucent Technologies (LU), Nortel Networks (NT), and Tellabs (TLAB) to buy.
Analyst Christopher Crespi says this quarter marks a cyclical inflection; while he expects only marginal improvement over the next few quarters, the worst has past. He notes the first step in a cyclical recovery is a return to normal seasonality, which he says he's starting to see.
Consistent with his view on North American capital expenditures, Crespi thinks the first quarter will be down significantly, with a return to moderate sequential improvement for the rest of the year. He does not upgrade component stocks given the significant inventory overhang that remains. He also says a fundamental component recovery will lag systems vendors by at least one or two quarters.