CommScope stock rating upgraded to Outperform by Raymond James on Amphenol deal

Investing.com - Raymond (NSE:RYMD) James upgraded CommScope Holding (NASDAQ:COMM) from Underperform to Outperform and set a price target of $19.00 following the announcement that Amphenol (NYSE:APH) will acquire CommScope’s CCS segment for $10.5 billion. The stock has surged nearly 74% in the past week, according to InvestingPro data, and is trading near its 52-week high of $15.15.

The upgrade coincides with CommScope’s release of what Raymond James described as a "solid" second-quarter 2025 report. The company reported revenue of $4.75 billion in the last twelve months, with a healthy gross profit margin of 41%. The firm noted that CommScope’s fundamentals have improved due to post-pandemic inventory normalization and cable TV upgrades.

Raymond James highlighted that datacenter connectivity now represents 40% of CCS segment sales, with a strong growth outlook driven by cloud operator demand serving as the biggest tailwind for the business.

The $10 billion in net proceeds from the Amphenol transaction will enable CommScope to repay $7.2 billion of debt and pay a special dividend to shareholders, significantly improving the company’s balance sheet.

While Raymond James acknowledged that the remaining CommScope business will have high customer concentration and modest growth prospects, the firm believes the improved balance sheet "saves the company," justifying the rating upgrade. InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 2.18, though investors should note the stock is currently trading above its Fair Value. Discover 14 additional exclusive ProTips and comprehensive analysis in the Pro Research Report.

In other recent news, CommScope reported second-quarter results that significantly exceeded analyst expectations, showcasing stronger-than-expected performance across all business segments. This impressive performance led to a notable surge in the company’s shares. Additionally, Amphenol announced its plan to acquire CommScope’s Connectivity and Cable Solutions segment for approximately $10.5 billion in an all-cash transaction. This acquisition is subject to CommScope shareholder approval and is anticipated to close within the first half of 2026. CommScope expects to receive net proceeds of around $10 billion after taxes and transaction-related expenses. The acquisition deal and the strong quarterly results highlight recent developments for both companies. These events underscore the importance of strategic transactions and financial performance in shaping company trajectories.

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