Nortel: $23 a share?

Over the past few months, Nortel has been conducting a concerted effort to woo press and analysts. The payoff has started, with one firm setting a near-term target of $23 a share for Nortel's stock and a longer-term prediction of $50--Nortel closed at $7.66 a share on Friday.

Canadian-based Paradigm Capital says the stock is due for an uptick since the company currently has a $4 billion market cap but $11 billion in revenues, with analyst Barry Richards calling the stock "profoundly undervalued today." Richards says the company is being valued at half of FY08 sales and 4.7 times EBITDA while industry averages run at one times FY08 sales or 10 times FY08 EBITDA.

Nortel is also cleaning up a $2.4 billion shareholder global class action suite, so that should remove a "significant overhang" for future progress. Paradigm has rated Nortel a Buy, but 24/7 Wall Street notes that a 200-percent gain in the company's stock is either one of the "gutsiest ... or craziest" calls that could be made.

For more:
- Nortel Update: Paradigm Capital Is Bullish,
- 24/7wallstreet.com asks if Nortel at $23 is gutsy or crazy?

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