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TELEBRAS (TBR) 126 13/16 +1 1/16. Whether you are a scalper looking to squeeze points from both ends of a volatile stock, or a longer-term investor in search of compelling growth, shares of Brazilian telecommunications concern Telecomunicacoes Brasileiras, better known as Telebras, have something to offer. TRADERS: After rising to a 12-month high of more than $165 in early July, TBR shares have tumbled as many as 45 points or 27%, on fears Brazil's high-flying stock market would be intercepted by a currency devaluation, following similar actions in Thailand and the Philippines. The concerns led to wild price swings in Telebras shares. However, after backing away from Brazilian stocks with downgrades and cautionary comments, Wall Street and foreign analyst are back in TBR's corner. The clash of valuation related buying with lingering concerns about Brazilian current-account deficits, have kept the beta on this issue in the stratosphere. INVESTORS: Following the almost 30% plunge in less than two months, almost every analyst whom exited the stock a few months ago is back on board the Brazilian bellwether. The main reason: privatization. Given that the privatization of Telebras is just around the corner, beginning with long-distance firm Embratel, analysts have never been more bullish on the company's long-term fundamentals. As a result, they view the stock's recent weakness as an opportunity to buy TBR assets at a compelling discount. According to some of the biggest names on the Street, TBR shares will soar over the next year. For example, CS First Boston has a target price of $160; J.P. Morgan's target is $170, and Morgan Stanley sees upside of 42%, based on its target of $180 a share. |
