Baird Upgrades Tellabs

Analyst Kenneth Muth believes the communications equipment company will beat fourth-quarter estimates on better international business and stronger FTTP business

Baird upgrades Tellabs (TLAB ) to outperform from neutral.

Analyst Kenneth Muth says he believes the company will beat his $349 million fourth-quarter revenue estimate by $5 million to $10 million, his 7 cents fourth-quarter earnings per share estimate by a penny, on better international business and a stronger Fiber-to-the-Premise (FTTP) business.

He also thinks first-quarter bookings will beat estimates. He notes the company bought FTTP vendor Vinci Systems in December 2004, which he views as positive because Vinci has positive gross margins on its Optical Network Terminals, improves position at Verizon for FTTP, and improves opportunity at BellSouth for FTTP.

Muth ups his $9 target to $11. He sees 33 cents 2004 earnings per share, and 44 cents 2005, with a potential upside to earnings per share during the second-half of 2005.

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