Alcatel-Lucent (ALU) Buys Itself Time But Trajectory Remains Unchanged
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Price: $3.46 --0%
Rating Summary:
14 Buy, 6 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
14 Buy, 6 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Alcatel-Lucent, S.A. (NYSE: ALU) shares moved higher for the second day in a row after a $1.615 billion credit deal was reached on Friday.
Commenting on the developments, credit analysts at Goldman Sachs said they view this transaction as a "positive step toward extending Alcatel-Lucent's runway" and "the rally across the capital structure as well as the steepening in the CDS curve is justified".
However, analysts also said they were concerned about Alcatel's longer-term operating and cash flow trajectory.
"The year in which Alcatel-Lucent's cash balance falls below our estimate of what is required to operate the business is extended in each scenario. We now see a bear case restructuring date of 2015 (vs. 2014 in our prior analysis), a base case restructuring date of 2017 (vs. 2015 in our prior analysis), and no restructuring within five years for our bull case," said analyst Franklin Jarman.
Commenting on the developments, credit analysts at Goldman Sachs said they view this transaction as a "positive step toward extending Alcatel-Lucent's runway" and "the rally across the capital structure as well as the steepening in the CDS curve is justified".
However, analysts also said they were concerned about Alcatel's longer-term operating and cash flow trajectory.
"The year in which Alcatel-Lucent's cash balance falls below our estimate of what is required to operate the business is extended in each scenario. We now see a bear case restructuring date of 2015 (vs. 2014 in our prior analysis), a base case restructuring date of 2017 (vs. 2015 in our prior analysis), and no restructuring within five years for our bull case," said analyst Franklin Jarman.
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