Newbridge stock gains on ratings upgrade
(All figures in U.S. dollars unless indicated)
By Susan Taylor
OTTAWA, Jan 11 (Reuters) - Newbridge Networks Corp. stock picked up gains of nearly 8.5 percent on Tuesday morning as a ratings upgrade boosted investor confidence.
Newbridge shares added C$4 on the Toronto Stock Exchange to trade at C$38, while on New York the issue gained 2 to 26- 1/16.
On Tuesday, Wachovia Securities Inc. upgraded its rating for Newbridge (Toronto:NNC.TO - news)(NYSE:NN - news) shares to a long-term buy from neutral with a price target of $35 in New York.
Wachovia said it expects Newbridge to meet or exceed third-quarter analysts' earnings estimates of 11 cents a share and estimated revenues of $485 million when it reports results on February 22.
The market may be taking comfort in Newbridge's affirmation on Friday of confidence in its performance for the third quarter, which closes on January 30, said one analyst.
That announcement followed a stumble by Lucent Technologies Inc. (NYSE:LU - news), the world's No. 1 supplier of phone equipment, which late last week warned it would miss earnings estimates.
``Some folks are reading their (Newbridge) calmness as a good quarter under way,' said Paul Sagawa, analyst at Sanford Bernstein & Co. in New York.
``I think things are okay, but I have to say when a company misses as many quarters as Newbridge has, and when they miss a quarter because it doesn't appear that the demand is there, that's always a red flag to me,' he added.
Newbridge stock is also being lifted by ongoing speculation the firm will be sold, Sagawa said. After its sixth earnings warning in 10 quarters in November, Newbridge said it had hired an investment banker and would consider offers.
``There are a lot of people in the stock who are playing for a takeout,' he said.
``There exists...a sword hanging over this company that any sign that a takeout won't happen would, I think, send some investors scurrying for the exits. So they've got to play it very carefully.'
($1=$1.46 Canadian) |
