ADC Telecom Keeps Its Buy Rec

We reiterate our Buy recommendation with a reduced valuation target for ADC Telecommunications (ADCT - Analyst Report), a leading telecom network infrastructure solutions provider, ahead of fourth quarter fiscal 2008 financial results.

Over the past several months, the company's business and valuation level have been impacted by general macroeconomic weakness that resulted in restricted capital spending on the part of telecom service providers and original equipment manufacturers. This is evident by a recently announced financial outlook by management for the remainder of fiscal 2008.

However, we believe the business fundamentals for 2009 remain firm as increasing demand for video streaming and required investments by enterprise customers for high-density data centers are expected to foster telecom carrier implementations of high-speed wireless and FTTX networking. We also consider that the current valuation of the company, at historically low multiples, is more favorable for longer-term investment horizons.

Nalak Das contributed to this report.

Read the full analyst report on ADCT