Zacks_Analysts' Blog : Brightpoint to Outperform - Analyst Blog

We upgrade our recommendation for Brightpoint Inc. (CELL) to Outperform based on our view that galloping demand for high-end smartphones and tablets throughout the world will drive the company’s valuation level higher in the near future. We believe the negative consequences of the proposed merger between AT&T (T) and T-Mobile USA are already reflected in the current valuation as it has plummeted nearly 39% in the last four months after this news surfaced.

In the previous two quarters, Brightpoint managed record-high mobile devices. Most importantly, the majority of these wireless handsets were managed through the company’s high-margin Logistic Services. Management reaffirmed a rosy picture for the rest of 2011. We believe business fundamentals of Brightpoint remain intriguing. Newly won distribution agreements coupled with effective cost control strategies will pave the way for the company’s future earnings growth.

The impetus for continued financial improvement remains Brightpoint’s diversity, as the company provides a full range of sales & distribution, logistics, and activation services while expanding on a global basis. The company enhanced its portfolio of product offerings for customers, while developing new sales channels for its suppliers. The Board of Directors of Brightpoint has enhanced the company’s existing share repurchase program by an additional $25 million to an aggregate of $130 million.

Brightpoint bought a 23% stake in Intcomex Inc., a leading provider of IT products in Latin America and the Carribean region. As per the deal, Intcomex will be allowed to sell its products through Brightpoint’s dealers.This mutual relationship between Brightpoint and Intcomex will benefit Brightpoint in two ways.

Firstly, controlling a 23% stake will allow Brightpoint to be present in Intcomex’s Board of Directors. Secondly, it will allow Brightpoint to access the Latin American and the Caribbean markets, where Intcomex is well positioned for more than 20 years. Currently, Intcomex holds a chain of approximately 44,000 resellers, retailers and customers across Latin America and the Caribbean region.