UPDATE: Bernstein Warns to Stay Away From Alcatel-Lucent
In a report published Friday, Bernstein Research analyst Pierre Ferragu recommended to stay away from Alcatel-Lucent, S.A. (NYSE: ALU) due to unattractive risk after earnings report.
Alcatel-Lucent's revenue came in at 2 percent above consensus and 4 percent above Bernstein's estimates. Ferragu noted that the Alcatel gave "very broad and imprecise" 4Q guidance. The analyst added, "The only dark area was in Free Cash Flow. As we expected, this was much worse than consensus; negative €218m versus negative €137 expected. Given the good top line and operating margin it, of course, implies a very bad cash conversion."
Bernstein reiterated its concern that the company's cost cutting plan is "not aggressive enough and maintains the company on a perilous edge." Ferragu further noted that investors underestimate the operating leverage sensitivity in Alcatel-Lucent's valuation.
Alcatel-Lucent closed at $3.83 on Thursday.
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