Shares in telecom gear maker Alcatel (Paris: FR0000130007 - news) -Lucent surge 7.8 percent, reversing recent losses and bouncing off their 200-day moving average, as traders cite a rating upgrade by Deutsche Bank (Xetra: 514000 - news) to 'buy' from 'hold'.
"We believe Alcatel has the key ingredients for a potentially successful turnaround," the analysts write in a note. "A new CEO with a solid cost-cutting track record, a likely positive revenue and margin inflection in 2013/14 and a termed out maturity profile.
"While Alcatel's 2015 margin targets appear ambitious, the stock trades on only 5 times 2015 (expected earnings) if these targets are missed, and 2 to 3 times if achieved. We view the risk/reward as favorable."
Reuters Messaging: blaise.robinson.thomsonreuters.com@reuters.net
