Shares of Nortel Networks Corp. rose sharply Thursday after the company's analyst day reassured Wall Street, leading a JPMorgan analyst to upgrade the Canadian telecommunications equipment maker.
Nortel shares climbed 82 cents, or 8.9 percent, to $10.02. They have ranged from $5.73 to $25.79 over the past year.
"After four years at 'Neutral,' we are finally upgrading Nortel back to 'Overweight' following Wednesday's analyst day as we now have a much better feel for how the company hits 10 percent operating margin over the next one to two years, even with very modest revenue growth," JPMorgan's Ehud Gelblum wrote in a note to investors.
He cited savings in research and development costs following Nortel's exit from the IMS and WiMax base station businesses, and savings in general and administrative expenses.
Separately, Lehman Brothers analyst Inder Singh noted that Nortel shares rose 13 percent Wednesday, indicating "investors are encouraged by recent tangible customer momentum" in some product segments.
"Overall, we believe management is executing solidly to stimulate top line and margin growth, and we sense management is optimistic about its ability to achieve its targets," Singh added.
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