3Com Upgraded On Possible Sale Of The Company

Standard & Poor’s telecom analyst Ari Bensinger Wednesday morning raised his rating on 3Com (COMS) to Hold from Sell, and raised his target price by $1 to $5 “to reflect a possible takeout premium.”

Tuesday, the Wall Street Journal reported that 3Com had been approached by several potential suitors. “We view a buyout as possible given the increased M&A activity in [the] networking transport space, as evidenced by peer Avaya’s (AV) recent agreement to be sold to private investment groups,” he writes.

While we see COMS’s Chinese and security businesses as attractive assets, potential suitors will need to deal with a struggling switching division that is losing share.

ADDENDUM: UBS analyst Long Jiang raised his target on the company to $5.50 from $5.20, “to reflect potential buyout interest.” He notes that rumored suitor Silver Lake Partners is buying Avaya along with TGP.

COMS 1-yr chart: