Lucent Upped at Schwab

It sets a $5 price target and moves the shares to overweight.
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traded higher in the Friday premarket after Schwab Soundview told clients to overweight the stock because of improving fundamentals in its optical and wireless businesses.

The brokerage upped its price target to $5 from $3.50, or 25 times its 2006 earnings estimate. Recently, Lucent was up 13 cents, or 3.2%, to $4.18 on the Instinet early session.

In a research note, Schwab said a recent appointment in Lucent's mobile unit, where longtime head Jim Brewington was replaced by Cindy Christy, improves sales prospects for the company's next-generation wireless equipment. Schwab expressed optimism the action will enhance Lucent's position in the universal mobile telecommunications systems space, where marketing conflicts had hurt the company in Europe.

"After speaking with several people close to Lucent, we believe the appointment of Christy will allow the company to attack the remaining UMTS opportunities with less baggage," it wrote. "Right now, Lucent does virtually no business in Western Europe on the mobility front, so any win there would be incremental. Still, it will be 2005 before those wins are realized."

Schwab also predicted the tone of Lucent's guidance will become "more constructive" after


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formally announces and lays out the terms of an expected data network contract for Lucent.

Schwab makes a market in Lucent's shares.