SG Cowen Upgrades Redback Networks to 'Outperform'
SG Cowen upgraded Redback Networks (RBAKD ), a telecom-equipment provider, to outperform from underperfom.
Analyst Christin Armacost says Redback can now operate with much less balance-sheet risk as it has emerged from bankruptcy free of debt, with about $35 million to $40 million in cash. With its stable Short-Message Service business, he thinks there's growing global demand for digital-subscriber lines, and thinks Redback's management is focused on turning a profit in 2004.
Armacost believes factors are in place for the newly issued shares to outperform the market. He narrowed the 44 cents 2004 loss estimate to a 23 cents loss, and sees 13 cents earnings per share in 2005. He says his revised model forecasts that the company will reach profitability in the fourth quarter of 2004, which would be the first time since 2000.