JP Morgan upgraded Catapult Communications (CATT) to overweight from neutral, after the company resolved engineering problems that had dragged on its results last year.
Analyst Paul Coster believes the company's earnigns per share (EPS) and revenue growth should resume in the fourth quarter. He thinks it could surprise to the upside against a backdrop of strong communications demand for protocol test solutions, particularly relating to HSDPA, HSUPA, and unlicensed mobile wireless applications. He notes unusually good visibility, with Catapult exiting the second quarter of fiscal year 2006 with $5 million of product sold but not shipped, and a record $11 million of deferred revenue. He tweaks his 14 cents fiscal year 2006 (ending September) GAAP EPS estimate to 15 cents and his 65 cents fiscal year 2007 estimate to 67 cents.