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Alcatel-Lucent Message Board

  • wh000_123 wh000_123 Mar 4, 2013 7:31 PM Flag

    "price target of $6 for December 2014..."

    brian nichols - seeking alpha - march 4

    "...Alcatel-Lucent is greatly cheaper than any of the other stocks in its industry. The stock is oversold and it is obvious that the market is rewarding margins in this particular space. The key will be whether new leadership continues to execute on the plan of reducing assets and divesting its unprofitable businesses. Like I said, the goal should be to eliminate $5 billion of its unprofitable segments; we already know that up to $1 billion from its submarine segment has potential buyers. Then, compared to the industry (which is key), if Alcatel can bring its 2014 operating margin guidance to 2-3% then a 1.0 price/sales ratio is highly likely (this is based on the stock being oversold and its outlook being negative). The company then has growing business in the Americas and in China with companies such as AT&T (T) and China Mobile (CHL) that will allow it to grow its remaining $13.5 billion business. With all things in consideration, I have a price target of $6 for December 2014, which is the time that I think it will take to execute on the company's restructure plan and to see a measureable outcome. However, 2013 should be a big year as the company reduces its assets, improves its balance sheet, and investors continue to speculate and look towards the future. I think Alcatel-Lucent could reach $2.50 and would still be undervalued compared to the industry. But keep in mind, this is a high-risk investment; there are a lot of "ifs" in the outlook."

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