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Morgan Stanley raised its investment recommendation on Arrow Electronics (ARW
) to equal weight from underweight on Thursday, explaining that the computer equipment distributor's shares should continue gaining value.
Analyst Bernie Mahon thinks Arrow Electronics will benefit from an upturn in the semiconductor cycle during the second half of 2005 through 2006. He said the company generates meaningful leverage from its lean cost structure, and continues to execute well in its mid-range computing business. Mahon believes the company's current stock price provides a good entry point for investors. He's keeping his earnings per share estimates for 2005 at $2.10, for 2006 at $2.50, and for 2007 at $2.87.