Shares of Sun Microsystems ( SUNW) could see $6 within a year if cost-cutting goes as expected, Morgan Stanley said in upgrading the stock Wednesday. The brokerage upgraded Sun to overweight from underweight and predicted the company will earn 8 cents a share in the fiscal year ending June 2007. It had previously forecast a loss of 8 cents a share in that period. For the fiscal year ending June 2007, Morgan now sees earnings of 20 cents a share instead of a loss of 7 cents a share. "Given a stabilizing business model and strong new product line-up, we've wanted to get comfortable with Sun as a product cycle story for the past few quarters," Morgan wrote. "We still don't have the confidence that organic growth will return on a sustainable basis but we do believe cost-cutting is likely near-term and could return Sun to profitability. We think any meaningful restructuring could drive upside to the $6 range over the next six to 12 months." The stock closed at $5.03 Tuesday. In early trading, it was up 19 cents, or 3.8%, to $5.22. "We continue to question the timing and degree of revenue traction given competitive products due out in C2H06 (Woodcrest) and mixed data points to date -- though we think cost-cutting is sufficient to generate a more positive risk/reward profile," Morgan said. "Several scenarios could provide additional upside over time, including: 1) more strategic business model restructuring; 2) sustainable refresh of UltraSPARC installed base; 3) growth acceleration from new products and improved attach rates; and/or 4) cash return to shareholders." For a similarly bullish take on Sun by TheStreet.com's Marc Lichtenfeld,
click here .