Shares of

Flextronics

(FLEX) - Get Report

enjoyed a modest boost Tuesday after one analyst upgraded his rating, arguing the company is set to grow faster than its competitors next year.

Shares of Flextronics recently edged up 23 cents, or 1.8%, to $13.

Banc of America analyst Scott D. Craig raised his rating to buy from neutral on the electronics manufacturing services company, noting that his estimate of 85 cents a share for fiscal 2006 earnings is two cents above the consensus and his estimate of $1.05 a share for calendar 2006 earnings is 6 cents above the consensus. Banc of America has led or co-managed a securities offering for Flextronics in the past 12 months.

"In particular, we believe the market has not fully appreciated Flextronics' growth potential with its large, new program ramps and general business wins," Craig wrote Tuesday morning. Craig cited a new handset program with Kyocera Wireless, worth an estimated $1 billion; new printer wins, worth $1 billion; and servers, worth $1 billion.

Craig said he believes consensus estimates will move to at least his targets in the next six to 12 months. "In fact, Flextronics should be one of the faster organic revenue growers in the EMS sector in calendar 2006," he said. Craig forecast 13% organic growth in 2006 for Flextronics, compared to 8% for the broader electronics manufacturing services sector.

"We also believe our current estimates could be conservative if management executes by divesting non-core businesses and using the proceeds to buy back stock/debt, increasing vertical integration, ramping new programs and completing modest restructuring," he added.

Flextronics is in the process of divesting its network services and semiconductor businesses, which is expected to bring $550 million to the company.

Yet, Flextronics is currently trading at a discount to its peers, Craig noted. The stock was trading at 12 times his calendar 2006 earnings estimate, compared with a group average of 14 to15 times earnings and 16 times earnings for the

S&P 500

. He set a price target of $17 based on 16 times his calendar 2006 earnings estimate.

The EMS market has been weighed down by overcapacity and pricing pressure, prompting a rash of restructurings and plant closures among several players. In addition, some big customers have begun consolidating their business with fewer manufacturers, adding even more competitive pressure.

One indicator on the health of the EMS industry is expected to come later Tuesday when

Cisco Systems

(CSCO) - Get Report

announces earnings. Flextronics has no direct exposure to Cisco, but Cisco generated 14% of sales for EMS rival

Solectron

( SLR) in the latest quarter and is also a customer of

Celestica

(CLS) - Get Report

and

Jabil Circuit

(JBL) - Get Report

.

In other EMS news Tuesday, both Solectron and

Sanmina-SCI

(SANM) - Get Report

announced new customer wins. Solectron said Wyse Technology has selected it to manufacture its thin-client product line. Sanmina announced a deal to license technology to DuPont Electronic Technologies. Shares of Solectron recently gained a nickel to $4.23, while shares of Sanmina were up 16 cents, or 3.4%, at $4.94.