Lucent continues meteoric rise
Reuters Story - April 02, 1998 14:18
%TEL %ENT %US %ELC %ELI %HOT LU BEL %MRG T V%REUTER P%RTR
NEW YORK, April 2 (Reuters) - Shares of Lucent Technologies
Inc. jumped six percent on Thursday in heavy trading,
increasing year-to-date gains to nearly 75 percent.
Lucent added 3-15/16 to 69-7/8 in the first day of trading
after the company's two-for-one stock split became effective.
"There's not any one reason. I think there are a number of
factors contributing to this rise," said Alex Cena, a
telecommunications equipment analyst with Bear Stearns.
Cena cited the stock split, a recent contract from Bell
Atlantic Corp. and a positive outlook for quarterly
earnings for the continuing enthusiasm.
"Every few days there seems to be something positive," Cena
said.
On Monday, Bell Atlantic named Lucent as one of five
equipment suppliers for a $1.5 billion project to upgrade the
Baby Bell's network over the next five years. Lucent's share of
the contract was about $400 to $500 million, Bell Atlantic
said.
Despite Lucent's strong gains over the past quarter, Morgan
Stanley Dean Witter analyst Alkesh Shah said in a research
report this week that he continues to rate the stock as an
outperform.
"We believe excellant domestic and international revenue
opportunities, improving margins and upside to estimates should
move the stock to our target price" of $75, Shah said in the
report.
Shah also said that PCS wireless spending by Lucent's
customers does not appear to have slowed as previously expected
but instead seems strong for the March quarter.
Previously, concerns about a potential slowdown in PCS
spending was seen as the biggest risk to Lucent's top line
growth, but now such a slowdown is not expected until 1999,
Shah said in the report.
For the fiscal quarter ended March 31, analysts expect
Lucent to earn $0.09 a share compared with $0.10 a share a year
ago.
Beyond the strong quarterly expectations, investors have a
bullish outlook for Lucent's long-term prospects.
The former equipment arm of AT&T Corp. has a solid
position in the phone market and is becoming an increasingly
powerful player in the data and Internet markets, analysts
said.
Lucent stands to reap major benefit as telecommunications
companies race to upgrade their networks to handle the
increased demand for data services. "If you listen, the telecom
companies are talking about data, data, data. There's a lot of
potential here," said one analyst who declined to be named.
Later this year, Lucent may use acquisitions to leap-frog
into a leading position in the data market, analysts said.
Lucent could use its strong stock price as currency in an
acquisition starting this fall, when the company concludes the
two-year restriction against business combinations that would
unravel the favorable tax-free spinoff from AT&T. |
