) hit a 52-week high of $4.59 during yesterday's trading session.
However, the stock closed the session at $4.50, reflecting a
solid year-to-date return of 226.4%. The average trading volume
for the last three months aggregated 14,708,147shares.
Despite its strong price appreciation, this Zacks Rank #3
(Hold) stock still has enough fundamentals that may further drive
the stock upward. Positive earnings surprises in two of the last
four quarters and long-term earnings growth expectations of 10.0%
are some catalysts driving the stock.
Alcatel-Lucent is a leading provider for ultra-broadband, 4G
and LTE (Long Term Evolution) networks. In the last quarter, the
company reported strong top-line results driven by higher
revenues across most of its businesses and regions, especially in
North America and Europe. A number of new contracts and
increasing demand for high speed wireless technologies and data
services in the emerging markets are some of the other catalysts
driving the stock.
The company's third-quarter results, reported on Nov 6, 2013
were encouraging as overall revenue increased, driven by growth
in IP (Internet Protocol) and LTE technology. In addition, gross
margin also improved due to a favorable product mix and higher
In the third quarter of 2013, Alcatel-Lucent's revenues
increased 7.0% year over year and 3.1% sequentially. Revenues
during the quarter were driven by strong growth in the IP
revenues, Wireless and fixed-networks, which was partially offset
by the company's older technologies.
Along with its third quarter results, Alcatel-Lucent also
announced its plans to raise approximately $2 billion by issuing
new capital and offering high-yield bonds for repaying debt and
funding its restructuring activities while strengthening its
The company is benefiting from its ongoing repositioning as
per 'The Shift Plan' that was formulated to transform itself from
being a telecom generalist to a specialist in IP networking and
Ulltra-Broadband services. The company now plans to shift focus
from the older technologies (2G and 3G wireless equipment) to
high potential newer ones like Internet routing. Under this plan,
management intends to trim costs and sell its non-performing
assets. Recently, the company announced job cuts to lower costs
by approximately 15% by 2015. The company's Performance Program
is also on target.
The next-generation super-fast 4G LTE technology has also
boosted Alcatel-Lucent's performance. The growing acceptance of
the LTE technology has prompted the mobile handset manufacturers
to develop phones that will be compatible with this network.
Over the last 7 days, the earnings estimates did not have any
upward or downward revisions for 2014. Although there is a lacuna
of estimate revisions, we envision an uptrend for the stock
backed by its strong growth potential.
Other Stocks to Consider
Alcatel-Lucent currently has a Zacks Rank #3 (Hold). Other
stocks in the industry which look promising at the moment include
TESSCO Technologies Inc
). EXFO currently has a Zacks Rank #1 (Strong Buy), while
ClearOne and TESSCO both carry a Zacks Rank #2 (Buy).
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