Analyst Sees Some Hope for Lucent - TheStreet

Analyst Sees Some Hope for Lucent

Susan Kalla raises her rating and price target on the telecom gearmaker.
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Lucent Technologies

(LU)

stands to benefit greatly if

AT&T

(T) - Get Report

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

.