UBS Upgrades Alcatel-Lucent (ALU) to Buy, Company's Strengths Outweight Weaknesses
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Price: $3.46 --0%
Rating Summary:
14 Buy, 6 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
Rating Summary:
14 Buy, 6 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
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UBS Investment Research upgraded its rating on shares of Alcatel-Lucent (NYSE: ALU) from Neutral to Buy today and shares have reacted favorably on the news trading up 0.87 percent or $0.05 to $5.81.
The firm notes that shares have fallen 10 percent since its peak in May due to overall weakness in the market and on fears around telecom equipment following cautious comments from Juniper (Nasdaq: JNPR), Finisar (Nasdaq: FSNR), and Ciena (Nasdaq: CIEN).
Due to the recent pullback, UBS encourages investors to buy on the weakness as underlying trends remain robust and as several drivers are still to come. The firm also raised its price target on the stock from €4.5 to €4.6 on higher forecasts.
UBS is very bullish on the company's growth and margin expansion potential. It forecasts a step function in cost savings in the second half from IT/real estate rationalization. The firm also believes that optics will remain solid and that many of its contracts will increase.
An analyst at UBS comments, "Apart from the fact that our/cons forecasts call for the highest-ever post merger margin in Q4, we believe several risks remain including an eventual decline in the high-margin CDMA business and failure to execute on cost savings. But our checks and mix analysis provides comfort in the near-term."
The firm notes that shares have fallen 10 percent since its peak in May due to overall weakness in the market and on fears around telecom equipment following cautious comments from Juniper (Nasdaq: JNPR), Finisar (Nasdaq: FSNR), and Ciena (Nasdaq: CIEN).
Due to the recent pullback, UBS encourages investors to buy on the weakness as underlying trends remain robust and as several drivers are still to come. The firm also raised its price target on the stock from €4.5 to €4.6 on higher forecasts.
UBS is very bullish on the company's growth and margin expansion potential. It forecasts a step function in cost savings in the second half from IT/real estate rationalization. The firm also believes that optics will remain solid and that many of its contracts will increase.
An analyst at UBS comments, "Apart from the fact that our/cons forecasts call for the highest-ever post merger margin in Q4, we believe several risks remain including an eventual decline in the high-margin CDMA business and failure to execute on cost savings. But our checks and mix analysis provides comfort in the near-term."
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