First Albany Ups Ditech Communications to Neutral

Explains that the stock's prices should rise from their discounted levels

First Albany upgraded Ditech Communications (DITC ) to neutral from underperform, explaining that the stock's prices should rise from their discounted levels.

Analyst Frank Marsala noted that Ditech on Thursday closed at $6.45, or about 1.1 times its book value; he sees it rising closer to 1.3 times book value, given the company's expectations of growth for the next couple of quarters. But he cannot recommend Ditech until he sees more orders for the company's Voice Quality Assurance products, revenues from Sprint-Nextel (S ), and other factors. He says second quarter results beat his estimates, so he narrows his 14 cents fiscal year 2006 (ending April) loss estimate to 12 cents loss, and ups his $49.1 million fiscal year 2006 revenue to $49.9 million.

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