Lehman Ups American Power Conversion to Overweight

Analyst Yuri Krapivin says the company's profitability is set to improve

Lehman Brothers upgraded American Power Conversion to overweight from equal-weight, explaining that its profitability is set to improve.

Analyst Yuri Krapivin believes American Power Conversion is successfully addressing global supply chain and logistics issues that hurt profitability in the second half of 2005, causing the stock to slide. His channel checks reveal significant reduction in lead times since the beginning of the first quarter, and indication that recent supply chain, logistics issues are being resolved. He believes end-markets remain fundamentally strong, and American Power Conversion continues to gain share through technological innovation. He raises his 75 cents 2006 earnings per share (EPS) estimate to 85 cents, and sets his $1.15 2007 EPS estimate. He also raises his $23 stock price target to $25.

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