TD Securities analyst Chris Umiastowski has issued a research report after spending some time thinking about Nortel’s investor day a couple of weeks ago, and talking with a number of industry contacts. He clearly came away impressed with management.
“We figure that if Nortel executes smoothly, the stock will likely double. To us, that justifies spending a lot of time exploring the details behind the plan. Not wanting to be limited to talking to management, we interviewed many of our industry contacts and found that, while Nortel has many “plans and projects” underway, we were not yet able to find evidence of tangible results. Inside the report, we present several examples of our findings that leave us feeling it’s too soon to “drink the Kool-Aid”. We can’t yet draw conclusions except to say that this business transformation plan is key to Nortel’s stock price. As for us, we will have to keep digging to gather more evidence. ”
Umiastowski is maintaining his “hold” rating on Nortel with a 12-month stock price target (pre-consolidation) of US$2.50.