C.L. King analyst Lawrence Harris this morning raised his rating on Tellabs (TLAB) to Accumulate from Neutral, setting an $8 price target. He notes that the stock has lost about a quarter of its value since reporting Q1 results on April 27.
For 2010, he now expects the company to earn 45 cents a share, up from 43 cents; for 2011, he keeps his forecast at 48 cents. For Q2, he moves up to 13 cents, from 12 cents.
Harris notes that the stock now trades at just 0.8x EV/2010 sales, and 0.7x 2011; he notes that the company has almost 50% of its market cap in cash. It has no debt.
As Harris notes, the sell-off in the stock is tied to analyst concerns that AT&T will use routers from rivals Alcatel-Lucent (ALU) and Cisco (CSCO) in its coming LTE network rather than Tellabs routers. The analyst notes that a spokesman for the company told Reuters yesterday that Tellabs intends to compete for future business at AT&T, and that “the solution we’re providing to AT&T has a longer life and a longer runway in the network than the market has given it credit for.”
TLAB is up 22 cents, or 3.5%, to $6.59.
No comments:
Post a Comment