Boston, MA 08/05/2014 (wallstreetpr) – The France-based network equipment manufacturer Alcatel Lucent SA (ADR) (NYSE:ALU) shares were upgraded by Morgan Stanley (NYSE:MS) on the expected EBIT margins as a result of the company’s efforts to reduce its portfolio, as well as, costs. The brokerage’s move comes on the heels of the company reporting a narrower loss for the June quarter and its intentions to divest part of its holding in submarine-cables division.
Rating Of Shares
The investment advisor has upgraded shares of Alcatel Lucent SA (ADR) (NYSE:ALU) to a rating of Overweight from Equal-weight on Monday. The brokerage believes that it was more convinced that the company would be in a position to achieve 12.5% EBIT margins as a result of cost cutting measures and pruning of its portfolios though it believes that the network equipment maker would not be able to achieve the targeted Euros 7 billion core revenues.
Analyst Francois Meunier said that the shares of the company were hurt more by its rivals’ solid results. He believes that it could have been an overreaction due to jitters since the restructuring plan is halfway. However, he warned that the stock was behaving much like a momentum one. The volatility could be there till the company announces its results for the third quarter in the absence of any fresh catalyst before it.
Another Brokerage Views
MKM Partners has also commented on the stocks of Alcatel Lucent SA (ADR) (NYSE:ALU). The brokerage had slashed its price target to $4.00 from $4.50 recently. However, it had retained its rating of Neutral on the company’s stock. Still, it meant that there is a potential of over 15% upside in the stock based on the closing price of $3.42 on Monday.
Submarine Cables Unit
Alcatel Lucent SA (ADR) (NYSE:ALU) is also planning to sell part of its holding in submarine-cables division through an initial public offering or IPO, which is expected to be in the first half of the next year, Bloomberg reported. It could allow the company to turn around its performance.
