Global Crossing Should Bounce On Insightful Jefferies Note

Jefferies notes Global Crossing (NASDAQ:GLBC) has declined 11% since the beginning of the week, due to concerns about 2Q07. Firm believes pricing has stabilized and 2Q07 estimates are achievable. Reiterates Buy rating & $30 target.

They expect to see margin improvement in 2Q07 and 3Q07 driven by

1) a historical downtick in expenses from 1Q to 2Q,
2) management's focus on cost control and
3) cost cutting activities during the quarters primarily in the SG&A line.

Jeffco believes that GLBC should be able to achieve their 2Q07 expectations including revenues of $549.3 million and EBITDA before non-cash compensation of $18.1 million.

Firm's FY08 EBITDA estimates implies a 6.9x EBITDA multiple, which is less than half the industry average. Finally, GLBC currently trades at 0.87x FY08E revenues, a discount to last year's Broadwing sale of 1.3x revenues.

Notablecalls: A beautiful call, matched only by the beauty of the stock's chart. I think GLBC makes a very nice bounce candidate today and over the next weeks.

Note that Jeffco's target offers hefty upside to current market price. That's bound to create interest. Going to call this one actionable!

Comments

[Beris:]

Once Wall Street Darling, Now Forgotten, Basement-Bargain Monopoly Play: Can GX Deliver Again? www.zacks.com/blog/com...

2007 Aug 29 10:46 AM