Wachovia upgraded Network Associates (NET ) to strong buy.
Analyst Christopher Russ says the risk/reward profile is attractive at current levels. He notes Tuesday's news of an SEC inquiry is for 2000 accounting practices, which predates the current management team. Under previous management, Network Associates recognized indirect revenue under its sell-in model, which creates the potential for channel stuffing. But the new managment team switched to a more conservative, sell-through model where revenue only is recognized when product are sold through to the end customer. While the SEC inquiry creates uncertainty near term, Russ says he remains confident in the company's current accounting practices and business fundamentals. He has a $30 target.