LONDON (MarketWatch) -- Goldman Sachs raised its rating on mobile-phone maker Motorola, Inc. (MOT:Motorola, Inc
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MOT 4.54, 0.00, 0.0%) to conviction buy from neutral, saying it sees 50% upside to its new 12-month $7 price target. The broker told clients that the current valuation only credits the company for the announced cost savings but not for any meaningful turnaround in its handset division. It estimated that the current stock price actually implies a negative $5 billion value for the handset business, which it said is overly negative as even shutting down the business would only cost $1 billion. Given the aggressive cost cutting, Goldman said it expects the market to start pricing in the more likely scenario that handsets will approach break-even in 2010, thus erasing the negative $5 billion handset valuation embedded in the stock. |
