Nokia, Ericsson and Alcatel were all downgraded by JP Morgan on Wednesday.
COMMENTS: The decoupling is going to increase. Why are you not so talkative as before?
European telecoms downgraded
Slowing demand is concerning, says JP Morgan
By Friedel Rother, FTMarketWatch.com 1:26:00 PM GMT Jan 9, 2002
LONDON (FTMW) - Nokia, Ericsson and Alcatel were all downgraded by JP Morgan on Wednesday, after the brokerage said it was concerned about slowing demand in the European telecoms sector.
"Current stock prices are now implicitly assuming too much medium-term growth in demand. In particular, we believe that the usage and speed of data adoption on wireless networks have been overestimated," JP Morgan said in a research note.
Nokia [SE:000053994, News, Chart, Research] had its rating cut to "market performer" from "buy" and Ericsson and Alcatel [FR:013000, News, Chart, Research] were lowered to "market underperform" from "market performer".
The bank also set new price targets. Ericsson is now valued at 48 Swedish kronor by the bank while Alcatel's [US:ALA, News, Chart, Research] price target is €16.
Nokia [US:NOK, News, Chart, Research] , meanwhile, has a new price target of €26. JP Morgan said the rating reflected its preference for the stock.
"Nokia ranks with the best companies globally, with a clarity of culture, powerful brand, and superior handset production and design capabilities," JP Morgan said.
Keep restructuring
As for Ericsson [SE:000010865, News, Chart, Research] , JP Morgan said the Swedish firm needed to continue restructuring in an effort to get rid of non-core assets, focus its research and development division and trim working capital.
Alcatel was described as a company with potential, but also needed to focus on restructuring, the bank wrote.
"Currently, margins are too low and working capital too high to generate sustainable free cash flow and economic returns once revenue growth picks up," JP Morgan commented.
The report from JP Morgan echoed the day after Merrill Lynch downgraded its ratings on the wireless sector, citing concerns over demand. See more on Merrill Lynch wireless cuts
Here's a selection of research alerts on FTMarketWatch on Wednesday:
LEHMAN SAYS KEEPS PACE MICRO [UK:PIC, News, Chart, Research] 'MARKET PERFORM' RATING, SETS 400P PRICE TARGET
GOLDMAN SAYS REMAINS POSITIVE ON PACE MICRO [UK:PIC, News, Chart, Research] , REITERATES "MARKET OUTPERFORM" RATING
ABN SAYS RAISES SAP [DE:716460, News, Chart, Research] 2002 EARNINGS ESTIMATES BY 8%
LEHMAN SAYS RAISES NEXT [UK:NXT, News, Chart, Research] 2002 PRE-TAX PROFIT ESTIMATE TO £260M FROM £250M
LEHMAN SAYS CUTS AEGIS [UK:AGS, News, Chart, Research] PRICE TARGET TO 100P FROM 120P, KEEPS 'MKT PERFORM'
JP MORGAN SAYS NOKIA [SE:000053994, News, Chart, Research] [US:NOK, News, Chart, Research] REMAINS PREFERRED SECTOR STOCK
MERRILL LYNCH SAYS CUTS COMPASS [UK:CPG, News, Chart, Research] GROUP TO "BUY" FROM "STRONG BUY"
CSFB SAYS NEXT [UK:NXT, News, Chart, Research] IS VULNERABLE TO AN M&S RECOVERY IN THE MEDIUM-TERM
CSFB SAYS STILL SEES VALUE IN AHOLD [NL:33181, News, Chart, Research] , KEEPS "BUY" RATING
ABN AMRO SAYS DIXONS [UK:DXNS, News, Chart, Research] RESULTS WERE AT TOP END OF EXPECTATIONS
TEATHER & GREENWOOD SAYS DIXONS [UK:DXNS, News, Chart, Research] HAS ONE OF THE BEST MANAGEMENT TEAMS IN THE RETAIL SECTOR
GOLDMAN SAYS EXPECTS MEDIA SECTOR [UK:PSON, News, Chart, Research] [UK:RTR, News, Chart, Research] [UK:WPP, News, Chart, Research] TO OUTPERFORM THE MARKET IN 2002
UBS WARBURG SAYS IS OVERWEIGHT IN SOFTWARE/SERVICES TECH STOCKS [FR:012533, News, Chart, Research] [DE:623100, News, Chart, Research] , NEUTRAL ON HARDWARE
MORGAN STANLEY SAYS HIGHLIGHTS PRUDENTIAL [UK:PRU, News, Chart, Research] , LEGAL & GENERAL [UK:LGEN, News, Chart, Research]
MORGAN STANLEY SAYS RYANAIR [UK:RYA, News, Chart, Research] REMAINS BENCHMARK STOCK AMONG BUDGET AIRLINES
See all research alerts on FTMarketWatch on Wednesday
See more analyst research in the FTMarketWatch research centre |
