shot up about 20% after Morgan Stanley upgraded the shares based on a discounted cash flow model.
The optical component maker rose 41 cents to $2.53 after the brokerage raised its rating to overweight from equal-weight, saying fair value is somewhere near $3. Morgan Stanley warned that in a weak market the shares get little support before their net cash of 73 cents a share.
The same analyst dropped his rating on fiber-optics giant
, sending those shares 20% in the opposite direction. Corning fell 64 cents to $2.51 after the analyst cited liquidity risk and competitive concerns.
"Even after Corning receives proceeds from its $500 million mandatory convertible preferred stock offering (for which it must set aside $105 million to secure future dividend payments), we don't think the company has sufficient cash to meet a $2 billion put option likely to be exercised in 2005 and, consequently, maintain our view that the company's balance sheet carries liquidity and dilution risk for current shareholders," Morgan Stanley wrote in a research note.
On the other hand, the note said, JDS has a clean balance sheet and its net cash position is expected to trough at about $1 billion in September 2003.
Moody's Tuesday rated the Corning convertible issue B1, reflecting concerns that the recovery in the company's telecommunications operations will be delayed until well into 2003.