December 11, 2008 11:00 AM EST
Morgan Joseph transitions coverage on Harris Stratex Networks, Inc. (Nasdaq: HSTX) with a Buy. Price target $6.
Morgan analyst says, "Despite the economic climate that is clearly affecting the carrier's decision-making process, Harris Stratex products address a segment of the wireless market that is one of the only growing business lines for carriers. Wireless backhaul is a direct beneficiary of the growth in wireless data traffic and a critical aspect of the carriers' business models. As such, we believe, a significant cut-back in carrier cap-ex spending is unsustainable for the carriers...The ownership restrictions on Harris Corp. (NYSE: HRS) expire on January 26, 2009. Harris Corp's ownership of HSTX is not core to the company and, as such, Harris Corp. is looking at alternatives including a spin-off, a secondary offering, a split-off, or a sale of all or part of the company's shares. We believe that, in this environment, the only available option for Harris will be a spin-off of the HSTX shares to the Harris shareholders. We note, however, that the additional 32.9mm shares should improve current issues surrounding HSTX's share float." |
