Why Alcatel-Lucent Shares Could Pop 20%

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Alcatel-Lucent  (NYSE: ALU  ) rallied 4% today after J.P. Morgan upgraded the networking equipment company from neutral to overweight.

So what: Along with the upgrade, analyst Sandeep Deshpande planted a price target of €3.30 on the stock, representing about 20% worth of upside to yesterday's close. So while momentum traders might be turned off by Alcatel's year-to-date price weakness, Deshpande's call could reflect a sense on Wall Street that the company's improvement prospects are becoming too cheap to pass up.

Now what: According to J.P. Morgan, Alcatel's risk/reward trade-off is rather attractive at this point. "It takes time to turn around a company that has not been successfully turned around since '06 M&A, hence our caution early in Alcatel's restructuring plan," said Deshpande. "With the restructuring proceeding at a faster pace than guided originally and the stock having pulled back because some investors have taken profits, not because progress has stalled, we upgrade the stock to Overweight (from Neutral)." Given J.P. Morgan's impressive stock-picking track record -- currently ranked in the top 10% of our CAPS community -- value-oriented Fools might want to take a closer look at Alcatel. 

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Read/Post Comments (1) | Recommend This Article (3)

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 July 02, 2014, at 6:35 PM, youngblood58 wrote:

    ALU is doing a lot of things right, but their issuing of more shares at a discount and their remaining debt load have scared away many investors recently, and justifiably.

    However, I do think this is a great value play and/or acquisition target play, and I am in the stock in real life.

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: 3016349, ~/Articles/ArticleHandler.aspx, 8/27/2015 8:33:24 PM

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...

Brian Pacampara

I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

Today's Market

updated Moments ago Sponsored by:
DOW 16,654.77 369.26 2.27%
S&P 500 1,987.66 47.15 2.43%
NASD 4,812.71 115.17 2.45%

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

8/27/2015 4:01 PM
ALU $3.36 Up +0.05 +1.51%
Alcatel-Lucent (AD… CAPS Rating: ****