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Friday October 29, 6:07 pm Eastern Time
JDS Uniphase shares glow hotter on rating upgrades
(All in U.S. dollars unless otherwise noted)
By Lydia Zajc
TORONTO, Oct 29 (Reuters) - JDS Uniphase Corp. (NasdaqNM:JDSU - news) (Toronto:JDU.TO - news) was the belle of the ball on the Toronto Stock Exchange on Friday as analysts upgraded recommendations and earnings forecasts for the hot fiber-optic equipment maker.
Shares in the company, based in suburban Ottawa, Ontario and in San Jose, California, climbed more than 11 percent or C$24.90 to C$249.50 on the Toronto Stock Exchange at midday, heading the list of net gainers.
On Nasdaq, its shares jumped 17-5/16 to 169-3/4.
The firm, the result of a marriage this summer between U.S. firm Uniphase Corp. and Canada's JDS FITEL Inc., reported after market close on Thursday that first-quarter earnings topped analysts' predictions. Executives also unveiled a surprise forecast that fiscal 2000 sales would grow 80-90 percent over the previous year, excluding the recent acquisition of EPITAXX Inc.
JDS Uniphase supplies equipment to companies such as Lucent Technologies Inc.(NYSE:LU - news) and Nortel Networks Corp.(Toronto:NT.TO - news) that boosts the capacity and performance of fiber-optic networks, which carry data on light wavelengths.
Analyst Rob MacLellan at CT Securities increased his recommendation to strong buy from accumulate and upped his 12-month target for the stock price to $195 from $127.
''Right now they're the biggest player in the hottest sub-sector of the communications space in North America, actually globally,'' MacLellan said.
''Given the results last night, conversations with management, so forth, we took another look at our numbers,'' MacLellan said. ''Given the fact that they've increased earnings estimates we think the growth is accelerating, post-merger, with the synergies and so forth.''
The company on Thursday unveiled plans to expand manufacturing capacity by two to three times by the end of next calendar year.
''With the capacity expansion they're planning, we've increased our (fiscal 2000 earnings per share) estimates from $1.16 to $1.30,'' MacLellan said.
Also, analyst Arun Veerappan at BancBoston Robertson Stephens said he started coverage of JDS Uniphase with a buy rating.
''We believe the potential for accelerating outsourcing of component innovation and production by equipment makers will likely elevate the growth rates for merchant optical component vendors over the coming years,'' Veerappan wrote in a report.
Two other brokerages weighed in with increased estimates and price targets. US Bancorp Piper Jaffray raised its fiscal 2000 earnings estimate to $1.31 a share from $1.13, fiscal 2000 revenue estimate to $1.12 billion from $972 million, and its share price goal to $190 from $105.
Warburg Dillon Read boosted its 2000 earnings prediction to $1.27 a share from $1.09 and upped its stock target to $175.
On Thursday night the company posted first-quarter net income excluding extraordinary items of $51.4 million, or 29 cents a share, compared to an average estimate of 25 cents a share from the 24 brokers polled by research house First Call/Thomson Financial.
($1=$1.47 Canadian)
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