STOCKS NEWS EUROPE-Alcatel dips as Exane cuts to "neutral"

Shares in Alcatel Lucent (ALUA.PA) fall 2.4 percent, the biggest losers on the CAC 40 index .FCHI, after Exane cuts its recommendation on the stock to "neutral" from "outperform" and credit rating agency Standard & Poor's lowers its long-term corporate credit rating.

"Alcatel-Lucent shares have reached their medium-term potential at this stage," Exane analysts write.

"With a strengthened balance sheet, the achievement of 80 percent of the planned cost cuts and a better market share dynamic than direct peer NSN, we believe Alcatel's recovery is far more certain than it has been since the merger. Yet we struggle to identify market- or Alcatel-specific drivers that would allow a more ambitious medium-term margin forecast," they write.

After the bell on Monday, S&P lowered its long-term corporate credit rating on Alcatel to 'B' from 'B+'.

"The downgrade primarily reflects our expectation that the turnaround in Alcatel Lucent's operating performance, and notably a return to sustainable positive cash generation, could take several quarters," writes S&P credit analyst Patrice Cochelin.

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