Raymond James upgraded Avanex (AVNX) to market perform from underperform.
Analyst Todd Koffman says the upgrade based on the acquisition of Alcatel's and Corning's optical component businesses for $63.5 million. He says the combined entity will have annual revenue of about $120 million, and a quarterly cash burn of $25 million, with cash balances of $250 million. He views the transaction favorably, given the product and revenue contribution, combined with the cash cushion being provided, to maintain entity in the current environment.
Koffman notes the combined entity will offer one of the broadest product lines in the industry, and Avanex now can boast that Alcatel is a key equity partner and customer.