Deutsche Bank analyst Sherri Scribner this morning upgraded shares of Avnet (AVT) to Buy from Hold, while lifting her price target on the electronics distributor’s shares to $39, from $36.
“We see AVT as an operating margin leverage story, with higher margins driving EPS growth greater than sales growth,” she writes in a research note. “In our view, the recent pullback in the name offers a good buying opportunity, as valuation has become more attractive.”
She says the company’s pending acquisition of Bell Microproducts (BELM) should add 30-40 cents to her current FY 2011 EPS estimates; with BELM, she thinks the company can earn $3.60 in calendar 2011, giving the stock a multiple of just 11x.
AVT is up 24 cents, or 0.8%, to $30.07.
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