RBC Analyst Puts $0 Price Taget on ALU

by InvestorPlace Staff | July 27, 2012 11:03 am

RBC Analyst Puts $0 Price Taget on ALU

It doesn’t get any more bearish than this.

While analysts often grab the spotlight by making eye-poppingly high price targets[1] — as of late, most have been made on Apple (NASDAQ:AAPL[2]) — an RBC Capital analyst went in the other direction, calling for as small a number as you could want on woeful Alcatel-Lucent (NYSE:ALU[3]).

As reported by Barron’s Tiernan Ray[4] in the daily This Morning report[5]:

“RBC Capital’s Mark Sue cut his price target on the stock from $1 to Zero, ‘as we believe the company may see revenues contract, experience profits reductions and continue to burn cash from operations.’

ALU has been restructuring for the past many years and is reacting with more layoffs as demand decreases and competition intensifies. Bond holders may have something left, but we believe there may be limited value remaining for equity holders.’”

“Limited value” seems like an unnecessary understatement when you’ve already said you expect the stock to be worth less than the paper it’s printed on.

The call came after Alcatel-Lucent swung a second-quarter loss on revenues that declined 7%, announced that it would be laying off roughly 5,000 people. ALU shares dropped roughly 3% Thursday, continuing an absolute cratering of roughly 80% in the past 52 weeks.

Endnotes:
  1. eye-poppingly high price targets: http://investorplace.com/2012/07/the-apple-aapl-price-target-circus-continues/
  2. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  3. ALU: http://studio-5.financialcontent.com/investplace/quote?Symbol=ALU
  4. Tiernan Ray: http://blogs.barrons.com/techtraderdaily/
  5. daily This Morning report: http://blogs.barrons.com/techtraderdaily/2012/07/27/this-morning-apple-for-authentec-alu-support-a-0/?mod=BOL_hpp_blog_tt

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