Analyst increases Price Target from $90 to $120 US ($135 to $180 CDN)
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Nortel shares ride momentum, outlook to new high
Reuters Story - December 14, 1999 15:21
TORONTO, Dec 14 (Reuters) - The stock of Nortel Networks Corp. , one of the globe's biggest makers of communications equipment, rode momentum and a positive outlook to a record high on Tuesday morning.
Nortel surged to a new peak of C$138.30 on the Toronto Stock Exchange, past the previous of C$134.60 set on Monday, before falling back at midday to C$134.40, up C$3.30 or 2.6 percent. In New York it was up 2-1/2 to 91.
Shares in the Brampton, Ontario-based company rose after a note from a Canadian analyst, who hiked his stock price estimate.
Todd Coupland at CIBC World Markets wrote on Tuesday that he had increased his price target to C$180 a share from C$135, or to $120 from $90. He stood pat on a "strong buy" recommendation for the stock.
Coupland, who did not change his earnings expectations, said in his note that Nortel was approaching the value of its major rivals: Cisco Systems Inc. of San Jose, California, and Lucent Technologies Inc. of Murray Hill, New Jersey.
"We believe that investors will begin to view Nortel's valuation in the context of Cisco Systems and Lucent Technologies," Coupland wrote.
He added: "We believe that our higher target is justified given Nortel's leadership in its key growth segments." They include Nortel's booming optical networking products for sending data, sound and pictures more swiftly down phone lines, and its wireless and remote access networking products.
Rob MacLellan, analyst at CT Securities, who rates the stock a long-term buy, said that "Nortel stock, at this point in time, is strictly a momentum play."
He also pointed to "delayed excitement" over Nortel's news on Monday of services aimed at punching up the sale and rental of software over the Internet.
Nortel stock is a core holding for investors in Canada due to its massive weight of close to 15 percent on the Toronto Stock Exchange's key 300 composite index. Its massive market gains this year, however, have pushed it past being an investment on fundamentals, MacLellan said. Nortel now relies on a steady stream of good news to keep the stock moving upward, he added.
($1=$1.48 Canadian)
((Lydia Zajc, Reuters Toronto Bureau (416) 941-8109, or e-mail lydia.zajcreuters.com)) |
