Deutsche Banc Alex. Brown
reiterated its buy rating on
Monday, citing its imminent merger with
, but slashed its revenue growth estimates because of the "continued inventory issues" of JDS' customers.
San Jose, Calif.-based JDS, which provides fiber optic components to telecommunications carriers, saw its shares slip 88 cents, or 1.75%, to $49.19 in midday trading. Meanwhile, SDL lost $3.38, or 1.82%, to $182.38 in trading on the
In his report, Deutsche analyst Raj Srikanth said he expects merger approval from the
to come through this week, and that shareholders of both companies would vote on the merger on Feb. 12. The companies have so far
postponed their shareholder meeting twice.
"We reiterate our Buy rating on the stock as a combination of JDSU and SDLI would give rise to the largest and most profitable company in one of the fastest growing sectors of the economy despite the current visibility problems in the short run," Srikanth said. SDL, also based in San Jose, supplies technology that enables data, voice and Internet information to be transmitted over fiber optic networks.
However, Srikanth cut his third-quarter revenue-growth forecast for JDS to 5% from 8.5%, and his fourth-quarter growth estimate to 5% from 8%.
Srikanth also said he expects the pro forma earnings per share of the combined company, excluding the divestiture of its Zurich plant, to be "neutral" or add "mildly" to JDS's estimated full-year 2002 earnings of $1.12 a share.