Banc of America upgraded Ciena (CIEN ) Cisco Systems (CSCO ), Juniper Networks (JNPR ), and Oni Systems (ONIS ) to strong buy; and upgraded Advanced Fibre Communications (AFCI ), Lucent Technologies (LU ), Nortel Networks (NT ), and Tellabs (TLAB ) to buy.
Analyst Christopher Crespi says this quarter marks a cyclical inflection; while he expects only marginal improvement over the next few quarters, the worst has past. He notes the first step in a cyclical recovery is a return to normal seasonality, which he says he's starting to see.
Consistent with his view on North American capital expenditures, Crespi thinks the first quarter will be down significantly, with a return to moderate sequential improvement for the rest of the year. He does not upgrade component stocks given the significant inventory overhang that remains. He also says a fundamental component recovery will lag systems vendors by at least one or two quarters.