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Mark Sue Downgrades NT
By Mark Evans | October 6, 2008
Declaring that “Public equity investors have mostly given up on the company”, RBC Capital Markets analyst Mark Sue has downgraded Nortel to “underperform” from “sector perform”, while slashing his target price by 50% to $2.
Sue said tough credit markets, the prospect of slower economic growth and increasing scrutiny of carrier spending could make if difficult to Nortel to “execute its turnaround plans”.
Sue is also concerned about Nortel’s $4.5-billion of debt, and the fact it has been free cash flow negative so far this year and in seven of the last ten quarters. As well, he believes the decision by Nortel to sell its metro Ethernet network business could not have come at a worse time.
A month ago, Sue reduced his NT target price to $6 from $8, citing more difficult economic conditions. In July, he was musing about Nortel hitting $18 if everything went according to plan.
Update: Barron’s Tech Trader Daily reports that RBC also downgraded Garmin, Ericsson, Alcatel-Lucent, Symmetricon and DSP Group.
Topics: Analyst Coverage |