Markets & Finance

Lehman Ups Lucent to 'Strong Buy'

Lehman Bros. upgraded its recommendation on shares of Lucent Technologies (LU) to strong buy and set an $18 18-month price target. On July 24, Lucent posted Q3 results.

Analyst Steve Levy says that in raising Lucent's rating, he recognizes that 1) he is most likely early -- quite possibly very early; 2) there is still significant risk of income statement stumbles in the next few quarters because of the tough macro-environment in telecom; and 3) positive catalysts might not become evident in the near term. However, he is comfortable upgrading the shares, and thinks the key to long-term share appreciation is continued improvements on balance sheet that should lead to significant operating margin expansion in fiscal 2003. He hiked his calendar 2002 EPS estimate to $0.20.

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