UBS Warburg Sees Bounce in Lucent Shares

Analyst Nikos Theodosopoulos said the stock is likely to move higher on some positive developments

UBS Warburg said Lucent Technology (LU ) shares could bounce higher, but the firm kept its hold rating. Lucent shares were up Friday and one of the most actively traded stocks on the Big Board.

Analyst Nikos Theodosopoulos said the stock is likely to bounce on quarterly results that meets analysts' estimates, gradual improvement in Lucent's balance sheet, additional cost cutting measures and compliance with debt convenants. While the stock could be viewed as a potential short term trade on these developments, he maintains a hold rating given the current capital spending environment, more conviction on the company showing improving gross margins and new product cycles.

He lowered his stock price target to $10, which is 25 times a normalized $0.30 CY 2002 EPS estimate. He said he believes that the concerns about insolvency or bankruptcy are too negative and unrealistic.

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