Windstream Retains Neutral Tag - Analyst Blog
2013年12月11日 - 8:45AM
Zacks
On Dec 5, 2013 we maintained our Neutral recommendation on one
of the major U.S. rural local exchange carriers (RLEC),
Windstream Holdings Inc. (WIN). Over the long
term, we expect the company to grow on investments in fiber-to-the
network and broadband network along with proper expense management
and a capital-efficient business model.
However, a competitive market scenario and soft enterprise and
carrier transport businesses remain concerns. The company currently
carries a Zacks Rank #3 (Hold).
Why the Reiteration?
We remain optimistic on Windstream’s focus on expanding its
service offerings to businesses with VoIP services, data bundles,
cloud and managed services, data center co-location, fiber
transport as well as increasing distribution channels. These are
likely to return positive results in the near term.
Little Rock, Arkansas -based Windstream has been adding a number
of data centers, rendering greater customer satisfaction, and
investing in business channels. Windstream has opened three data
centers so far this year and is currently building another one in
Charlotte, NC. These units are being constructed to cope with the
growing demand for data centers and cloud-based services from
customers all over the nation.
The company continues to invest in long-term growth initiatives
such as fiber-to-the-tower (FTTT) deployment and broadband network
capability. With the rise in demand and contract wins, Windstream
is ramping up its FTTT construction while with broadband expansion,
the company is targeting to enhance its coverage and increase speed
in various areas. Windstream plans to add 75,000 new broadband
addressable lines through further investments. These initiatives
are expected to be accretive to the company’s revenues.
On the flip side, Windstream’s carrier transport business
continues to remain under pressure as the demand for dedicated
circuits from telecom operators remain subdued. Furthermore, softer
sales from enterprise business can hurt the company’s growth in the
near term.
Windstream’s major risks also include access lines losses that
are affecting its wireline business revenues. The company reported
weak third-quarter 2013 financial results, with both the top and
the bottom line failing to beat the respective Zacks Consensus
Estimate. Loss of voice and digital subscribers along with reduced
intrastate access rates affected the results.
A highly leveraged balance sheet is another concern for the
company. These risks force us to maintain a neutral stance on the
carrier.
Other Stocks
While we remain sidelined on Windstream, Zacks Ranked #1 (Strong
Buy) Telenav Inc. (TNAV), Hawaiian Telcom
Holdco Inc. (HCOM) and Shenandoah
Telecommunications Co. (SHEN) look attractive for the
short term.
HAWAIIAN TELCOM (HCOM): Free Stock Analysis Report
SHENANDOAH TELE (SHEN): Free Stock Analysis Report
WINDSTREAM HLDG (WIN): Free Stock Analysis Report
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