UBS Raises 2007 Estimates, Target Price

Citing Nortel’s prospects in the CDMA business this year, UBS Securities has raised its EPS and revenue targets to $12.12-billion and $0.66 respectively from $11.96-billion and $0.56. UBS also raised its stock target price to $26 from $23.50.
In 2008, UBS is looking for revenue and EPS targets to $12.4-billion and $1.50 compared with earlier estimates of $12.54-billion and $1.60 as it expects CDMA sales to decline by 6% to reflect the completion of Rev A rollouts (as opposed to earlier estimates of a 5% increase).
In terms of Nortel’s failure to be selected as one of Sprint’s three WiMax suppliers, UBS said this “is a disappointment given NT’s incumbency and focus to win the deal. We believe this loss may cause NT to reevaluate its overall wireless strategy and possibly deemphasize wireless longer term.”
On a positive note, UBS expects Nortel will focus on boosting its enterprise business in 2007 so it can become a “meaningful #2 to CSCO. We continue to believe NT would have to look at acquisitions to strengthen its enterprise portfolio, particularly in enterprise data”.
Update: covered the news as well.

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