stands to benefit greatly if
decides to upgrade its network in 2004, a Freidman Billings Ramsey analyst said on Thursday.
AT&T is in the midst of finding suppliers to improve its network, analyst Susan Kalla believes, and currently the company is Lucent's second-largest customer.
On this basis, Kalla raised Lucent's investment rating to outperform from market perform, narrowed her 2004 loss estimates and bumped up the company's target price to $3 from $2.
AT&T's network upgrade could add an incremental $250 million to $500 million in expenditures a year, leading to total spending in 2003 of $3.1 billion and $3.6 billion in 2004. The company is considering buying soft switches, IP edge routers and passive optical networks.
By the end of 2003, Kalla said in a research report, AT&T could award Lucent a contract.
Kalla now expects Lucent to lose 7 cents a share in 2004, better than her previous estimate of a loss of 22 cents a share. Her new revenue estimate is $9.2 billion, up from $8.8 billion.
Shares of Lucent, based in Murray Hill, N.J., were rising 2.5% at $2.03 recently on the
New York Stock Exchange