Market Overview

Casa Systems Is Oversold, Morgan Stanley Says In Upgrade

Casa Systems Is Oversold, Morgan Stanley Says In Upgrade

A sharp price decline in Casa Systems Inc (NASDAQ: CASA) — driven by a secondary offering prior to lockup expiration in April and first-quarter results in May — has begun to overly discount not only the company's expansion opportunities, but its core cable business, according to Morgan Stanley. 

The Analyst

Morgan Stanley's Meta Marshall upgraded Casa Systems from Equal-weight to Overweight with a $23 price target. 

The Thesis

Casa System's valuation stands at 13 times 2019 EPS, which is below the growth and profitability-adjusted multiple of 20-22, Marshall said in the Tuesday upgrade note. (See the analyst's track record here.) 

The stock's multiple is discounting the opportunity with core customers as they upgrade to DOCSIS 3.1 and next-generation architectures, the analyst said. 

Marshall sees Casa Systems as well-positioned in the second half of 2018 and expects the stock to revert to his base case scenario of 18 times 2019 EPS by the end of the year as the market gains more confidence in the company's track record.

Moves toward the bull case are more likely as the company demonstrates meaningful revenue in expansion areas like wireless in 2019, Marshall said. Morgan Stanley's bull case assumes the stock is going to trade at 24 times 2019 EPS as growth exceeds expectations.

The Price Action

Casa Systems was trading up 8.42 percent at $17.76 at the time of publication Tuesday afternoon. 

Related Links:

3 IPOs Trickle In As Year Wraps Up

Benzinga's Top Upgrades, Downgrades For July 10, 2018

Latest Ratings for CASA

Jul 2020Morgan StanleyMaintainsEqual-Weight
May 2020Morgan StanleyMaintainsEqual-Weight
Mar 2020Morgan StanleyMaintainsEqual-Weight

View More Analyst Ratings for CASA
View the Latest Analyst Ratings


Related Articles (CASA)

View Comments and Join the Discussion!

Posted-In: Meta Marshall Morgan StanleyAnalyst Color Upgrades Price Target Analyst Ratings Tech Best of Benzinga

Latest Ratings

BIIBRBC CapitalMaintains277.0
RLICompass PointInitiates Coverage On90.0
CSCOWolfe ResearchDowngrades42.0
GILDRBC CapitalMaintains86.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at