Robert W. Baird gave the Communication Equipment industry some good news as it announced it has initiated coverage on one of its stocks.

CommScope Inc. (CTV) [Chart - News - Analysis] was given a rating of Outperform » Underperform on 9/23/2009---a positive sign for the stock that investors typically welcome. FYI, Robert W. Baird uses the following rating scale when analyzing stocks: Outperform, Neutral, Underperform.

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CommScope Inc. has an average analyst recommendation score of 1.7 and competes for investment dollars with QUALCOMM Inc. (QCOM) [Chart - News - Analysis] and Nokia Corp. (NOK) [Chart - News - Analysis]---two other stocks in the Communication Equipment industry that have average analyst recommendation scores of 2.0 and 2.5 respectively.

Analyst recommendations are averaged and scored using the following rating scale:

- 1.0 = Strong Buy

- 2.0 = Buy

- 3.0 = Hold

- 4.0 = Sell

- 5.0 = Strong Sell

Why are Upgrades and Initiations Good and Downgrades Bad?

One event that is almost certain to get a reaction from Wall Street is an analyst upgrade or downgrade. Everyone is looking for an edge in the stock market, and quite often, traders turn to stock analysts to get that edge.

Upgrades and coverage initiations are typically good for stocks because they show that analysts either believe that the stock is going to perform better in the future or that the stock is worth covering and providing analysis on.

Downgrades are typically bad for stocks because they show that analysts believe that the stock is going to perform worse in the future.

What is a Stock Analyst?

Check out the Understanding Stock Analyst Research and Recommendations video and article for more info.

A stock analysts is a person---typically employed by a large bank, investment firm or analysis company---who devotes his/her life to learning and making predictions about a company and its future performance.

Stock analysts sift through company reports and filings, talk to company management, probe customers and competitors and basically do whatever they can to find out if a company is healthy and growing or sick and shrinking. Because this is incredibly demanding work, stock analysts typically only monitor one or two companies at a time.

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The Wallingford, Connecticut-based company's second-quarter net income attributable to Amphenol totaled $74.9 million or $0.44 per share, compared to $109.9 million or $0.63 per share in the prior-year quarter.

On average, 9 analysts polled by Thomson Reuters expected the company to post earnings of $0.42 per share. Analysts' estimates typically exclude special items.

Net income for the quarter was $76.8 million, compared to $112.4 million in corresponding quarter of the previous year.

Quarterly net sales amounted to $685.2 million, down 19% from $846.8 million in the same quarter of last year, and fell short of eight Wall Street analysts' consensus revenue estimate of $672.73 million for the quarter. Currency translation had the effect of decreasing sales by about 3% or $23 million in the second quarter of 2009 compared to the previous year.

For the six-month period, the company reported net income attributable to Amphenol of $149.3 million or $0.86 per share, lower than net income of $207.5 million or $1.15 per share reported in the year-ago period.

Net income totaled $153.9 million for the six-month ended June 30, 2009, compared to $211.6 million reported a year earlier.

Looking forward to the third quarter, based on constant currency exchange rates and some seasonal moderation, the company projects earnings to range between $0.41 and $0.43 per share, with revenues in the range of $670 million - $685 million. Wall Street analysts have a consensus earnings estimate of $0.44 per share on revenues of $684.38 million for the third quarter.

Further, the company noted that it continues to believe that it could perform well in the current economic environment due to its leading technology, increasing positions with customers in diverse markets, worldwide presence, lean cost structure, and agile, experienced and entrepreneurial management team.

Among other players in the field, CommScope Inc. (CTV) currently expects second quarter adjusted operating income, excluding intangible amortization and special items, to be in the range of $100 million - $125 million. Revenue is forecast to range between $800 million and $850 million. Street analysts expect the company to report revenues of $835.47 million for the second quarter. The second-quarter results are due to be released on July 29.

Another peer, Tyco Electronics Ltd. (TEL) said it now expects third-quarter GAAP earnings from continuing operations of $0.00 - $0.07 per share, and adjusted earnings from continuing operations of $0.10 - $0.17 per share. Earlier, the company had projected GAAP loss from continuing operations of $0.05 - breakeven per share, and adjusted earnings from continuing operations of $0.01 - $0.06 per share. Tyco currently expects sales to range between $2.45 billion and $2.55 billion, up from the prior guidance of $2.35 billion - $2.45 billion. Third-quarter results are slated to be reported on July 29, with analysts expecting earnings of $0.14 per share on revenues of $2.49 billion for the third quarter.

Amphenol shares, which have been trading between $18.38 and $52.28 in the past 52 weeks, closed Wednesday's trading session at $33.95.

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