- Level 3 Communications (NASDAQ:LVLT) is pulling back a bit, down 3.5%, after a strong 6.9% gain yesterday post-earnings.
- Stephens upgraded the firm to Overweight from Equal Weight and raised its price target from $52 to $63, implying 30% upside from its current price of $48.29.
- Valuation is improved after a recent sell-off (Level 3 has declined 10% over the past month), says Stephens' Barry McCarver, who notes revenue growth is picking up after the company achieved its synergy target from integrating TW Telecom.
- “EMEA and Latin America should continue to improve as the company invests in its network and has opportunities for more acquisitions," McCarver notes. "Headwinds from International revenue have neutralized and may become tailwinds this year.”
- The company guided to significantly higher cash flow in the coming year, and some analysts think that could mean not only a possible repurchase program but also acquisitions.
- The company could go after privately held XO Communications, says Cowen's Colby Synesael, or it could be a target itself -- for a buyer like Comcast (NASDAQ:CMCSA).
- Previously: Level 3 up 7% as revenues, profits grow (Feb. 04 2016)
- Previously: Level 3 EPS in-line, misses on revenue (Feb. 04 2016)