CIBC Lowers JDS to Hold
CIBC World cut its investment recommendation on shares of JDS Uniphase (JDSU )to hold from buy.
Analyst James Jungjohann says visibility has worsened for telecom carriers and optical system manufacturers for 2002. He thinks shares could be as much as 50% overvalued. JDS trades at about 6.2 times his $866M calendar year 2002 sales estimates -- a large premium to a group which trades just over parity at 0.3 times. He notes that Ciena trades at 3.7 times and there appears to be no reason why JDS shares couldn't trade down to $4, a 24% drop from current levels. He says that the carrier's revenues also keep falling. The analyst widens his $0.08 fiscal 2002 (June) per share loss to $0.10 and cuts his breakeven forecast for fiscal 2003 to a loss of $0.09.