Salomon Cuts Brazil's Telemar To Neutral Versus Outperform
Dow Jones Online News, 08/15/2001 07:23
NEW YORK -(Dow Jones)- Salomon Smith Barney has cut its recommendation on Brazilian telecommunications giant Tele Norte Leste Participacoes, or Telemar (TNE), to "neutral" from "outperform."
In a Wednesday research note, the investment bank said that following the company's second-quarter results and conference call with analysts, it is also lowering its 12-month price target to $16 per American Depositary Receipt and lowering its 2001 per-ADR earnings forecast to $0.62 from $0.78
At 1355 GMT (9:55 am EDT), Telemar is at $12.65, up $0.05.
"We believe that the low level of earnings visibility surrounding the company's existing fixed-line business compounds our doubts on the value of the company's PCS business," Salomon said.
PCS refers to personal communications services, a wireless phone service somewhat similar to standard cellular telephony but emphasizing personal service and extended mobility.
While Telemar's second-quarter phone lines growth was up 30% from a year ago, its bad debts, or uncollected bills, rose to 4.6% from 1.8% the year before. Its bottom line was also hit by surging payroll expenses.
Telemar's net profit fell 32% from the like period a year earlier.
"On balance, we believe that TNE is high risk investment given the concerns surrounding the stock," Salomon said.
(This story was originally published by Dow Jones Newswires)
Copyright (c) 2001 Dow Jones & Company, Inc.
All Rights Reserved |
