Level 3 Communications (LVLT) is down over 4% on high volume today after it was cut to Sell at Deutsche Bank in pre-market trading, but its target was raised target to $4.65. This is a head scratcher and it probably won’t be too long before bulls start defending it. As a reminder this was Cramer’s Top Speculative Pick for 2007, and you can be generally sure that he will not have a change of heart soon enough that he would not be out defending it. He also named it his best "Under $10 Pick" at the end of 2006.
Other recent analyst calls from the last two weeks: Credit Suisse gave it an outperform rating with a $7.50 target. J.P.Morgan raised its price target to $8.00 and maintained an overweight rating. There are other calls on it, but you can expect the vocal bulls in the name to be out discussing this as a gift. I don’t have any dogs in the fight at all, but I can say that if I was a holder and I saw this research report this morning it would be a head scratcher and would make me wonder the logic behind the call.
This research note is one that will be challenged by the bulls. The initial call from Deutsche Bank was a Hold back in August when it was much lower, so a downgrade and raised target after a rise? It sounds like "I was wrong, and now even more wrong." I can hear Cramer on it now: "What the…. Dumb as a bag of hammers…. Thanks for the nothing call…." and the like.
LVLT is down 4.4% at $6.32, and its 52-week trading range is $3.21 to $6.80.
Jon C. Ogg
January 17, 2007
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