DJ Morgan Stanley Sees Less Risk In Sun Microsystems >SUNW
By Ellen Sheng Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Morgan Stanley upgraded its investment opinion of Sun Microsystems Inc. (SUNW) to equal weight from under weight Thursday, citing
diminished downside risk.
"We believe upside to our current estimates is more likely than not," analyst Rebecca Runkle wrote, pointing out that the stock is currently trading at around fair value.
"While we aren't wholly comfortable with our best-case scenario, which suggests upside to the $8 to $10 range, our current residual income model suggests intrinsic value
in the $6 to $8 range," Runkle said.
Shares closed at $6.89, up 12.2%, at the end of Wednesday's session. They recently traded at $7.08, up 2.6%, or 19 cents.
Runkle credited the company's restructuring efforts for reducing risk but called for further cost-cutting. Sun Micro announced 3,400 job cuts in October, and management
plans to cut another 1,000 jobs over the next year.
Also brightening Sun's outlook: increased market share for the company's USII products.
"This is more of a risk-reward call based on the next twelve months' fundamentals and Sun's current stocks price," Runkle wrote.
The analyst maintained her "conservative" estimates for fiscal 2003 and 2004, saying she wanted to "see another quarter or two of improved performance," before making
any possible changes.
-Ellen Sheng, Dow Jones Newswires; 201-938-5176; ellen.sheng@dowjones.com
(END) DOW JONES NEWS 05-09-02
09:42 AM |
