Will Alcatel-Lucent Keep Soaring in 2014?

Alcatel-Lucent (NYSE: ALU  ) soared in 2013, with shares more than tripling thanks to a long-awaited rebound in the telecommunication equipment industry. But with Cisco Systems (NASDAQ: CSCO  ) , Nokia (NYSE: NOK  ) , and several other competitors doing their best to take advantage of favorable conditions as long as they last, can Alcatel-Lucent jump out to equally impressive gains in 2014?

2013 was a year of rebuilding at Alcatel-Lucent, with the company having to take several difficult steps in order to ensure its long-term success. With investors now seeing Alcatel as having gotten over the toughest initial phase of its turnaround, the next step will be to see how the company does in capitalizing on strength in the telecom-equipment industry going forward. Let's take a closer look at Alcatel-Lucent's prospects for 2014.

Stats on Alcatel-Lucent

Average stock target price


Full-year 2013 EPS estimate


Full-year 2014 EPS estimate


Full-year 2013 sales growth estimate


Full-year 2014 sales growth estimate


Forward P/E


Source: Yahoo Finance. NM = not meaningful due to negative earnings estimates.

What's next for Alcatel-Lucent in 2014?
As you can see above, analysts believe that Alcatel-Lucent has only limited upside from current share-price levels, with their average target price representing just a 2% gain above yesterday's closing share price. That's similar to views on Nokia, where analysts actually have a target below the current share price, and Cisco merits only about 5% upside from where shares trade now.

Source: Wikimedia Commons.

What 2013 did for Alcatel was to make it a legitimate player in the telecom equipment industry again in the eyes of those who follow the industry closely. Just last month, analysts at Citi argued that Alcatel could end up taking market share from Cisco in the router space. With Alcatel having come out with new technology designed to help users improve the programmability of their enterprise networks through software-defined networking, Cisco's proprietary switching technology could be at risk. Moreover, large new equipment contracts in China and Latin America, including a key role in China Mobile's 4G network, have helped bolster Alcatel's competitiveness in the industry, putting Cisco and its peers on the defensive.

Still, Alcatel has a long way to go before it can declare final victory. Debt still represents a major overhang on the company's financials, and with net losses expected through this year, it'll be tough for Alcatel to take many big steps toward solving its debt problems. Nevertheless, if more big deals keep coming in, then the path to profitability might take less time than investors currently expect, and that could put Alcatel in position to start paying down its debt faster.

Moreover, some are concerned about the ambitious goals of Alcatel's so-called Shift Plan, which involves the company repositioning itself to focus more on ultra-broadband access and Internet-protocol networking. Just this morning, twin negative comments came from two different analyst firms, with one arguing that Alcatel doesn't have large enough operations in mobile networks and that its wireline and optical businesses don't have any true growth prospects. Yet with share prices arguably factoring in expected high growth rates, anything short of ideal performance could leave shareholders wanting more.

In the end, Alcatel's success will rely on its ability to outperform Nokia, Cisco, and other companies in catering to the needs of its customers. In particular, if Europe starts to emerge from its recession, then the resulting increase in capital activity on the continent could help it more than its rivals, pointing to even more success in 2014 and beyond.

Find the real winner in telecom
Want to get in on the smartphone phenomenon? Truth be told, one company sits at the crossroads of smartphone technology as we know it. It's not your typical household name, either. In fact, you've probably never even heard of it! But it stands to reap massive profits NO MATTER WHO ultimately wins the smartphone war. To find out what it is, click here to access the "One Stock You Must Buy Before the iPhone-Android War Escalates Any Further..."

Click here to add Alcatel-Lucent to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Read/Post Comments (1) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 09, 2014, at 3:55 PM, will1946 wrote:

    ALU is destined to rise a lot; their ceo said it would be a few quarters before it really got back on solid ground, but the potential is recognized, and it is a different company than when Leo ran it. I would worry more about CSCO if I were you. Neither ALU nor NOK depend on Europe for their survival.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2789066, ~/Articles/ArticleHandler.aspx, 8/31/2015 2:57:58 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

Today's Market

updated 2 days ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 4:00 PM
ALU $3.37 Up +0.01 +0.30%
Alcatel-Lucent (AD… CAPS Rating: ****
CSCO $26.00 Down -0.17 -0.65%
Cisco Systems CAPS Rating: ****
NOK $6.32 Down +0.00 +0.00%
Nokia CAPS Rating: **