Level 3, TW Telecom gain after Macquarie upgrade

Macquarie's Kevin Smithen has upgraded Level 3 (LVLT +3.5%) to Outperform, and set a $51 target. Merger partner TW Telecom (TWTC +2.7%) is following Level 3 higher.

After talking with management, Smithen thinks Level 3 "has set conservative cost-savings targets" for the merger - the company previously forecast $240M/year in savings. He also considers TW easier to integrate than past acquisitions such as Global Crossing, given its lack of international assets and the fact the company isn't a roll-up of various properties.

He admits there's still "a decent risk" of an integration misstep, but also believes "the risk of not owning [Level 3] if the company executes well is too great."

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