Zacks Investment Research upgraded shares of Avnet Inc. (AVT) from UNDERPERFORM to NEUTRAL on April 02, 2013, with a target price of $37.00.
Avnet reported a decent second quarter 2013 with EPS and revenue beating the Zacks Consensus Estimates. But year-over-year comparisons were disappointing due to continued soft industry demand driven by macroeconomic uncertainty, weak PC demand, and inventory rebalancing. Continuous margin contraction, slow recovery in semiconductor market and continuing macro uncertainty are negative catalysts. The company also guided for a weak third quarter citing tough spending environment. Despite the headwinds, we find continuous share repurchase initiative encouraging. Also, expected turnaround in IT spending and synergies from Avnet's recent acquisitions looks positive. We upgrade the stock to Neutral from Underperform recommendation.
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