Markets & Finance

UBS Upgrades Tellabs to 'Neutral'

UBS Investment upgraded Tellabs (TLAB) to neutral from reduce.

Analyst Nikos Theodosopoulos says he's upgrading on valuation, as the stock is trading within 9% of his $6.30 target. He keeps his fundamental view for the telecom-euqipment maker as neutral, and he's somewhat cautious.

Theodosopoulos thinks the overall telecom-capital spending environment is likely to have bottomed out during the first half of the year. He says a modest sequential industry recovery in the second half of the year, plus an ongoing restructuring, should put Tellabs on track for breakeven by yearend.

He's cautious on the company's long-term earnings power given its exposure to the U.S. optical-network space, which could lag behind the overall telecom-equipment sector in a recovery.

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