"Morgan Stanley research analyst Bernie Mahon upgraded Flextronics International to 'overweight' from 'equal-weight' and initiated a $13 price target on the stock, expecting it to outgrow most of its peers due to fading headwinds and exposure to strong end markets in handsets and Microsoft's Xbox 360.

'We recommend building positions in Flextronics shares at current levels, as we view the risk/reward as favorable and expect the stock to trade up to our price target,' wrote the analyst in a recent research note.

Flextronics shares are down about 25% from the year's high, but Mahon does not believe the recent rally in the stock has fully priced in the company's return to growth in 2006. Moreover, he has concluded that that investor concerns over future electronics manufacturing services, or EMS, market share loss to ODMs seem exaggerated.

The research analyst expects Flextronics to benefit from its exposure to the fast-growing handset market and Xbox 360 build over the next year. He is modeling roughly $450 million in incremental revenue from the Xbox 360 for 2006." [link]