Baird is upgrading Syntax-Brillian (NASDAQ:BRLC) to Outperform from Neutral based on recently announced strategic initiatives and what they view as an attractive valuation. New price target is $3.

Syntax-Brillian is ramping TV manufacturing at Compal, moving away from Kolin. Firm believes the move eliminates most of the counterparty risk seen with the Kolin relationship. Syntax-Brillian also announced it will implement headcount reduction, cutting its overhead costs by approximately 20%.

In firm's opinion, the company's decision to focus on strategic customers is positive and will result in better service to its U.S. big-box retailers. Should the company be successful securing
guaranteed orders from some of its big-box customers, working capital issues would be virtually
eliminated.

They believe Syntax-Brillian's chances of bankruptcy are very slim and that the company will be
able to refinance its debt, significantly lowering its interest expense. Recent streamlining of
business model should help cash flows as well.

Current weakness in U.S. TV demand is leading Syntax-Brillian to gain market share as tier-two/three TV brands are currently ongoing consolidation, in Baird's view. Excess panel capacity should help Syntax-Brillian's gross margin going forward. * Risks to the stock remain significant, including a potential delisting due to filing delays, potential financial restatements, as well as possible additional cash issues.

However, these risks are already built into the current valuation. The stock is currently trading at about 0.3x last reported tangible book and 0.2x our new C08 revenue estimate.

Notablecalls: Wow. This will help the stock lift today as Baird is reportedly one of the most influential ratings mover. BRLC has been left for the dead recently given Sony's much-speculated entry into lower-cost LCD TV market.

I have really nothing to add here. I think the stock goes to $1.35-$1.40. Today.