Baird Has Great Expectations For ADC Telecom

Kenneth Muth, an analyst with Robert W. Baird, Friday raised his rating on ADC Telecommunications (ADCT) to Outperform from Neutral. Muth says that he believes the telecom equipment maker can beat Street expectations in the second half. He expects a pickup in spending from AT&T’s (T) BellSouth and Cingular units, with stable spending from Verizon (VZ).

Muth says he also sees potential gross margin improvement, resulting from volume leverage and cost cutting. Muth raised his October 2007 fiscal year EPS estimate to 95 cents a share from 91 cents; for FY 2008 he goes to $1.10 from $1.05.

Muth, who notes that the stock is down 25% from its July peak, has a price target of $19.

ADCT 1-yr chart: