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Investing.com -- CommScope was upgraded by Raymond (NSE:RYMD) James and Morgan Stanley (NYSE:MS) after announcing the $10.5 billion sale of its Connectivity and Cable Solutions (CCS) segment to Amphenol (NYSE:APH), a move that will eliminate its debt burden and unlock shareholder value.
Raymond James raised the stock to Outperform from Underperform, calling the sale a balance sheet “reset” that, alongside strong Q2 results, puts the company on firmer footing.
The firm set a $19 price target, noting that datacenter demand now accounts for 40% of CCS sales and helped drive a 20% year-on-year increase in CCS revenue.
CommScope reported Q2 revenue of $1.39 billion, beating Street expectations, with adjusted EBITDA of $338 million and EPS of $0.44, well above consensus.
The company said it will use the $10 billion in net proceeds from the sale to repay $7.2 billion in debt, redeem all preferred equity, and issue a special dividend. The transaction is expected to close in the first half of 2026.
Morgan Stanley upgraded CommScope to Equal-weight from a more cautious stance, saying the deal prices the CCS asset at a premium amid strong AI-related interest in fiber infrastructure.
It noted the stock has likely priced in near-term gains, but called the sale the “right move” to unlock value while demand remains high.
The remaining business, focused on broadband and enterprise networking, faces slower growth and higher customer concentration but is expected to generate $325–350 million in 2026 EBITDA.