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In a note to clients on Wednesday, Citi analysts said they see the top telecom equipment stocks for 2023 as Keysight Technologies (NYSE:KEYS), Motorola Solutions (NYSE:MSI), Arista Networks (NYSE:ANET), and Ciena (NYSE:CIEN).
The analysts told investors in a note that 2023 will see a slowdown and possible recession, with higher costs for consumers resulting in less disposable income.
“For 2023 we change our stock rankings and move stocks with a large and unique backlog higher and move consumer electronics exposure stocks lower,” the analysts wrote.
However, they added that not all backlogs are the same, with some for more commoditized products, which can be at risk when short-supply components become available, and competitors can pressure share gains and pricing.
“This is common in servers, personal computers, storage, and consumer electronics. Other backlogs are unique (Keysight, Motorola Solutions, and Arista) and therefore have minimal risk of cancellations from double ordering. This is common in test and measurement, optical, public safety, and government programs. We also note the mix of backlogs compared to overall company sales can greatly differ such as for HPE and CSCO where the order backlog is not materializing to provide upside to total company results versus peers,” they added.
