Sector Snap: Computer Hardware Stocks Gain

NEW YORK (AP) — Shares of some computer systems and hardware makers gained Tuesday after Morgan Stanley raised its rating for the sector, expecting revenue growth to return next year.

In a note to clients, Morgan Stanley analyst Kathryn Huberty said she expects a faster revenue and profit margin recovery for hardware makers next year than investors are anticipating. She raised her rating to "Attractive" from "In-Line."

Huberty also upgraded Aliso Viejo, Calif.-based QLogic Corp., a company that makes data storage and networking equipment, to "Overweight" from "Underweight." Huberty said she expects "gross margins to improve noticeably" for the company in the fourth quarter as demand improves, something not reflected in average earnings forecasts from analysts.

She also upgraded Lexmark International Inc., a Lexington, Ky.-based printer and supplies company, raising her rating to "Equal-weight" from "Underweight." While Lexmark is still "competitively challenged," she said, its stock is not likely to fall much as business improves with the economy.

Lexmark shares jumped 92 cents, or 4.9 percent, to $19.72 in midday trading, while QLogic climbed 79 cents, or 4.8 percent, to $17.15.