Goldman Bullish on Synchronoss

Synchronoss (SNCR) shares are sharply higher Thursday morning after Goldman Sachs analyst Elizabeth Grausam raised her rating on the stock to Buy from Neutral. The stock was also added to the firm’s Americas Conviction List. Grausam describes the company as “a pure-play beneficiary of new service introductions in the US wireless and VoIP markets, with the opportunity to establish an international presence in 2008.” She adds that “the stock’s recent trading activity is decoupled from the fundamental momentum in the business, and we believe this is the best growth idea in our coverage universe.”

Grausam’s call is part of a larger report she wrote on the broader telecom billing and customer care sector. She also repeated a Buy recommendation on Amdocs (DOX), maintained Syniverse (SVR) and NeuStar (NSR) at Neutral ratings, upgraded Convergys (CVG) to Neutral from Sell, and reduced CSG Systems (CSGS) to Sell from Neutral. She says that CSG faces “contract renewal risk in 2008 with its two largest clients.” Meanwhile, she notes that Convergys is down 31% over the past 12 months.

Her larger point is that the entire industry will benefit from the buildout of new telecommunications services that has occurred over the last few years. “Healthy network spending from 2004 to 2007 is a decisively bullish leading indicator for software and services vendors to the telecom end-market,” she writes. Grausam adds that the sector features “attractive valuations and a traditionally defensive end-market, making the sub-sector an attractive place to look for investment opportunities in 2008.”

Grausam contends carriers will “increasingly focus on the monetization of recent network investments by more aggressively marketing next-generation service and content
offerings.”

Thursday morning:

• Synchronoss is up $2.77, or 8.5%, at $35.29.
• Convergys is up 33 cents, or 2%, at $16.84.
• Amdocs is off 23 cents, or 0.7%, at $33.81.
• CSG Systems is down 33 cents, or 2.2%, at $14.96.
• Syniverse is up 15 cents, or 1%, at $15.40.
• NeuStar is up 16 cents, or 0.6%, at $28.13.