Are Rising Earnings Estimates a Solid Reason to Bet on COMM Stock?

Earnings estimates for CommScope Holding Company, Inc. COMM for 2025 and 2026 have moved up a stellar 371.4% to $1.65 and 80% to $1.80, respectively, over the past year. The positive estimate revision depicts bullish sentiments about the stock’s growth potential.Image Source: Zacks Investment ResearchPortfolio Restructuring Buoys COMMCommScope continues to benefit from stringent cost-cutting measures and a focus on core operations. The company is actively pruning its non-core businesses while emphasizing inorganic growth to boost its portfolio strength and remain at the forefront of technological innovation by developing solutions to support wireline and wireless network convergence.  The company has completed the divestiture of its Home Networks business to Vantiva SA (formerly Technicolor SA) to focus more on core operations. The tax-free spin-off is aimed at enabling both CommScope and Home Networks to drive innovation while allowing the latter to focus more on go-to-market strategy and develop its own technologies for home and consumer products on the back of a resilient manufacturing model. The restructuring provided flexibility to the Home Networks business with a dedicated research & development team that will be responsible for stimulating growth in a “Connected Home” future. In addition, CommScope has strengthened its portfolio by acquiring Casa Systems' Cable Business assets. The acquisition enhanced CommScope’s market-leading position in Access Network Solutions. It bolstered its virtual CMTS (Cable Modem Termination Systems) and PON (Passive Optical Network) product offerings, bringing significant synergies to the company’s operations. This move aligned with CommScope's strategy to expand its technological capabilities and customer base, especially in the domain of cloud-native network solutions.COMM Rides on Network ConvergenceCommScope’s comprehensive, differentiated portfolio allows it to hold a dominant position in the communication infrastructure industry. With operators moving toward converged or multi-use network structures, combining voice, video and data communications into a single network, CommScope is dedicated to developing solutions designed to support wireline and wireless network convergence, which will be essential for the success of 5G technology.  The enhanced product offerings enable CommScope to provide more comprehensive solutions, catering to the growing demand for high-speed, reliable network connectivity. By offering a seamless integration of CMTS products, CommScope aims to enhance customer satisfaction and loyalty.Price PerformanceCommScope has surged 241.7% over the past year compared with the industry’s growth of 127.7%. It has also outperformed its peers like Bandwidth Inc. BAND and Anterix Inc. ATEX. Bandwidth has declined 10.8%, and Anterix is down 26.1% over this period. Both Bandwidth and Anetrix appear to be hindered by intense competitive pressure from bigger rivals, who enjoy sufficient operating flexibility to respond to evolving technological changes and bundle competing products and services at little or no incremental costs.One-Year COMM Stock Price PerformanceImage Source: Zacks Investment ResearchCOMM’s Short-Term Profitability at StakeDespite the positives, CommScope faces fierce competition in each of its served markets. It has multiple competitors, some of which have substantially greater assets and financial resources. The company also faces competition from several small and medium-sized companies at a regional level. The success of 5G technology hinges on substantial investments to upgrade infrastructure in the core fiber backhaul network to support expected growth in data services. Although these investments will eventually help minimize service delivery costs to adequately support broadband competition, rural coverage and wireless densification, short-term profitability is likely to be eroded, resulting in earnings dilution. Efforts to build resilient infrastructure facilities to withstand natural catastrophes such as hurricanes and floods add to operating costs.Image Source: Zacks Investment ResearchEnd NoteCommScope’s product portfolio has been specifically designed to help global service providers efficiently deploy fiber networks. Portfolio restructuring and focus on network convergence augur well for its long-term growth prospects. The company also continues to be one of the leading suppliers of intelligent antenna platforms for FirstNet deployments. The uptrend in estimate revisions further portrays optimism about the stock’s growth potential.However, margin pressures and low order rates stemming from high inventory levels have eroded its profitability. Stiff competition further leads to price wars that affect margins. With a Zacks Rank #3 (Hold), CommScope appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CommScope Holding Company, Inc. (COMM): Free Stock Analysis Report Bandwidth Inc. (BAND): Free Stock Analysis Report Anterix Inc. (ATEX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks