Zayo: Reorg Drives Fundamentals, Potential Buyout Offers Optionality

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About: Zayo Group Holdings, Inc. (ZAYO)
by: JP Research
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JP Research
Long/short equity, Growth, long-term horizon, macro
Summary

Zayo announced a reorganization plan merging the different vertical products of the network division and scrapped plans to separate into two public companies.

Evident from the 2Q19 results that Zayo's core fundamentals improved as it recorded its second-best bookings as a result of reorganization efforts.

The reorganization plan puts more focus on sales which will fuel its growth in the future.

Potential buyout values the company's share in the $32-38 range, offers investors optionality.

Zayo Group (ZAYO) had a decent 2Q19 with revenues and EBITDA both meeting consensus while margins slightly beating consensus. These results were fueled by ZAYO recording its second-best ever net bookings as a