UBS affirmed Buy rating for ECI, raised price target to $5

Upgrade based on ECtel's rising value and ECI's future debt reduction
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UBS Warburg reiterated a Buy rating for communications equipment maker ECI Telecom (Nasdaq:ECIL). It raised the price target from $4 to $5 per share, 30% above ECI's market price on November 9 after an 8.6% leap.

In the last month ECI stock has gained 40%.

Analysts Jonathan Half and Tomer Jacob note that ECI trounced its own updated outlook for the third quarter of 2001, released on October 7.

ECI stock is underpriced, the analysts wrote, based on its E2002 sales multiple of 0.45. The analysts estimate ECI's net asset value at $5.5 per share.

The analysts base their target increase for ECI on two chief factors|: the rising stock of subsidiary ECtel (Nasdaq:ECTX), and the group's future decrease in debt to the banks.

On November 9, ECtel's market cap was $233 million, while ECI's was $354 million.

The ECI executive did not provide a revenue forecast for the fourth quarter or for 2002, but said that the orders-payments ratio stands at 0.8.

Based on expectations that ECI's business environment will not be recovering before the second half of 2002, it lowered its sales forecast for the fourth quarter to $245 million, and for 2002 to $976 million.

Third-quarter revenue was $262.9 million, indicating that UBS expects ECI to underperform in the fourth quarter.

ECI's third-quarter results were assisted by its access gateway unit Inovia, which reported a 29% jump in quarterly sales from the parallel to $92.3 million.