Bank of America sharply upgraded telecommunications company CommScope from underperform to a buy rating on Thursday, citing the company’s strategic sale of its connectivity and cable solutions business for $10.5 billion to fiber-optic cable maker Amphenol.
Announced Monday, the all-cash deal broadens Amphenol’s broadband portfolio and network infrastructure footprint. It is Amphenol’s largest acquisition to date, aimed at diversifying its industrial interconnect products and capitalizing on surging demand for broadband and 5G connectivity. The transaction, expected to close in the first half of 2026, will boost Amphenol’s market share and add to its diluted earnings per share in the first full year after closing.
Shares of CommScope surged 42% in premarket trading on Monday following the announcement and gained nearly 2% Thursday. Amphenol’s shares rose about 2% Monday but slipped nearly 1% Thursday.
For CommScope, the sale marks a key step in its broader strategy to streamline operations and strengthen its balance sheet amid a $9.4 billion debt load as of December. The connectivity and cable solutions unit designs and supports cabling products for broadband, enterprise, and wireless networks. Following the divestiture, CommScope will retain its access network solutions business and part of its networking and security services.
Analyst Tal Liani highlighted the deal’s impact, noting, “The agreement with Amphenol is another step in the company’s breakup, designed to eliminate the risk of default, expose the sum-of-parts value, pay down the debt obligations and buy back Carlyle’s preferred equity.” He added, “More importantly, the residual is now trading at 3x EV/EBITDA, which leaves additional room for stock upside, in our view.”
Liani raised his price target on CommScope to $20 from $4, implying a 39% gain from Wednesday’s close.
The deal follows Amphenol’s earlier purchases of CommScope’s Andrew business and outdoor wireless network units, signaling the company’s ongoing commitment to expanding its role in the fast-evolving connectivity landscape.
CommScope’s decision to sell its CCS division is a calculated effort to bolster its balance sheet, reinforcing its commitment to financial prudence and strategic agility in the competitive network infrastructure sector.
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