Eircom's share price rose just 5 1/2 cents yesterday despite a report from investment bankers Salomon Smith Barney which said the stock was undervalued compared to its peers and was a "well-run, well-positioned company".

The bankers set a €4.77 target price for the share, which closed yesterday at €4.07 1/2. Salomon said it suspected the stock price performance might continue to be affected more by market factors than stock specific ones. It said Eircom was now a bid target, although uncertainty remained over the eventual ownership of the 35 per cent shareholding which Telia and KPN are selling.

"With Telenor being outbid for Esat, the main challenger to Eircom, the consolidation of the global telecoms industry has now reached Ireland, which should further support the stock price," it said.