UBS Warburg Slashes Telecoms to Hold

Analyst Nikos Theodosopoulos thinks worsening U.S. telecom capital spending trends makes it hard to keep a buy rating

UBS Warburg downgraded Juniper Networks (JNPR ), Cisco Systems (CSCO ), Nortel Networks (NT ) Ciena (CIEN ), Tellabs (TLAB ), ADC Telecommunications (ADCT ) and Avici Systems (AVCI ) to hold from buy.

Analyst Nikos Theodosopoulos says his downgrades are based on a review of the further worsening of U.S. telecom capital expenditure trends for 2001. He thinks the group is stuck in a trading range for the next two quarters, perhaps longer. While he doesn't see a material downside in the group as most of the "bad news" already is factored into the stocks' prices, the poor telecom spending environment makes it hard to keep a buy rating.

Theodosopoulos says he will upgrade the group if he is convinced that 2002 will be better. He cut Cisco's $24 target to $20, Nortel's $20 target to $18, ADC's $12 target to $10, and Avici's $25 target to $15.

He kept the $60 target on Ciena, the $60 target on Juniper and the $45 target on Tellabs.

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