Lehman Brothers Levy on Lucent
Mark,
<< Wall Street analysts remain negative on the stock, with only three of 32 analysts holding Buy recommendations. ... Steven Levy, a Lehman Brothers analyst, recommends the stock. He expects Lucent to see 5% revenue growth, as its exposure to the growing wireless sector more than offsets declines in wireline business. >>
I mentioned prior that on 4/18/05 as LU was sliding into earnings I added LU to my wireless basket at $2.36 (a 52 week low) treating it as a potential overly-downtrodden medium-term recovery play in progress.
While analyst's opinions only occasionally influence my investment decisions (although their research does influence them) while I was drilling down on Lucent in the month preceding my 1st LU buy, some very good and relatively detailed analysis by Lehman Brothers' Steven Levy on April 7 when LU was at $2.61, helped tip my scales. He continues to rate LU 1-OW and in that April 7 report Levy stated they "firmly believe that Lucent is the most attractive investment in our universe and continue to recommend investors use this painful pullback as a prime buying opportunity." Their price target is still $6.50 (by end of year), but it should be noted that has been their target since last July, and since the target was set and before the Q1 wireless sector and tech pullback, LU's high was only $4.50.
I also should add that in wireless sector I personally find Lehman's Tim Luke highly credible but am much less familiar with Steven Levy. For those that have access to Lehman Brothers analysis (I access through Fidelity) and are doing DD on Lucent, Levy's April 7 11 page report on Lucent titled "Capitalizing on Telecom Misperceptions" is a worthwhile read.
Today Levy issued a 7 page "Company Update" titled "A Tidbit Here, A Tidbit There" highlighting some aspects of Lucent's newly filed 10Q.
He opens with these statements:
Earlier last week, Lucent filed its March quarter 10-Q and while we believe the document did not contain any major new material disclosures, it did provide some interesting tidbits of information and also some additional details on previously reported results. For the past two years, we have been commenting that Lucent has continued to increase its level of disclosure and transparency and this document is another data point along that positive array. It is our experience, over the past two decades, that companies with improving confidence in their business fundamentals, tend to increase their financial disclosures and thus we see this trend at Lucent as another positive, albeit subtle, sign. We believe much of the data provided within the filing could be modestly positive for the LU shares and therefore we maintain our 1-OW rating and end of year $6.50 price target, based on roughly 25x our CY06 EPS estimate of $0.26.
Best,
- Eric - |
