SAN FRANCISCO (Thomson Financial) - Shares of 3Com Corp. rose Thursday after
the company was upgraded to outperform from marketperform at Bernstein Research,
which also set a price target of $3.
Last week, Bain Capital ended its $2.2 billion bid with China's Huawei
Technologies Co. to buy 3Com in the face of opposition from the Committee on
Foreign Investment in the U.S.
In a note to clients, Bernstein said, "Bain's withdrawal of its offer to
acquire 3Com has placed the company in 'broken deal purgatory' arb specialists
are exiting the stock, at least seven sell-side analysts discontinued coverage,
and the complexity of 3Com's markets and financials create a barrier to quick
fundamental analysis. We think that investors can exploit the dearth of packaged
information and ready buyers."
The broker notes that Marlborough, Mass.-based 3Com, a telecommunications
equipment maker, is trading more than 60% below the price Bain offered last
September.
Bernstein estimates 3Com can generate $130 million in free cash flow in
2011, justifying a higher stock price.
Shares of 3Com rose 5.6% to $2.26.
Gabriel Madway
gm/jw
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