We initiate on COMM with a Strong Buy rating and a $16 PT. CommScope Holding Company, Inc. designs and delivers infrastructure solutions that comprise the connective tissue of broadband, wireless, and residential networks globally. Beyond the near-term cyclical pressure and execution risks that dominate market attention, 3 converging trends create potential for an outsized re-rating: 1) Structural enterprise-fiber demand to power the AI datacenter buildout is running ahead of the comms equipment cycle at 30%+ y/y, accelerating visibility into 2026; 2) The early impact from BEAD stimulus accelerates in FY26 to provide a $150M tailwind, driving COMM above consensus revenue with $5.5B (+11.1% y/y) expected; 3) As capacity and cost actions work through the P&L, we expect operating leverage to augment these benefits, amplified by management’s shift from buybacks to debt paydown to de-risk the equity story. Our 1.85x FY26E EV/Sales multiple remains discounted by 33% to peers and assumes COMM’s multiple is unchanged at current levels, which we think discounts the durability of the next upcycle. We acknowledge potential disruption from tariff uncertainty and customer digestion with hyperscalers, but backlog momentum and Q1 run-rates signal a bottom has been set. This represents a classic disconnect between backward-looking consensus and forward-looking fundamentals, offering patient investors an asymmetric R/R as COMM moves from cyclical laggard to cyclical leader.
Markets Reward Discipline
We expect the narrative around COMM to inflect sharply as the scale and pace of AI-driven data center demand pushes fiber inflection toward the enterprise. Enterprise fiber revenue was $213mn in