UBS cut its investment rating on



Thursday, saying it has a bearish outlook on the company's wireline business.

Analyst Nikos Theodosopoulos believes that Lucent's "lack of catalysts" in its wireline unit could hurt its overall near-term growth.

"As the wireline capex spending shifts toward next generation broadband access, VoIP and IP switching, we view Lucent as not very well positioned in these areas relative to peers," he wrote in a research note.

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As a result, the analyst downgraded Lucent to reduce from neutral, also based on the stock's recent price increase.

On a positive note, Theodosopoulos believes the company's wireless business is performing better because of expected spending increases by

Sprint PCS


and Verizon Wireless.

The analyst also raised his target price on the company to $1.80 from $1.70 and lifted his fiscal year 2004 and 2005 revenue and earnings estimates. He now expects the company to lose 2 cents a share in 2004 and earn 5 cents a share in 2005.

He raised his revenue estimate to $8.7 billion from $8.6 billion in 2004. Shares of Lucent were up 2 cents to $2.32 in morning trading.