Canaccord Adams Reiterates a 'Buy' on Towerstream Corp. (TWER); Tweaks Estimaets

November 6, 2009 1:08 PM EST

Canaccord Adams reiterates a 'Buy' on Towerstream Corp. (Nasdaq: TWER), price target $2.

Canaccord analyst says, "Having reached near-EBITDA-breakeven of –$0.530 million in Q3/09A (a slight improvement over Q2/09A EBITDA of –$0.660 million), Towerstream has re-accelerated its subscriber growth during Q3/09 as it added 169 net new customer locations by generating a record 257 gross additions and reduced its churn rate to 1.71% from 1.90% during the previous quarter...We estimate Towerstream is now in a position to enter new markets to bolster future growth...We are tweaking our 2009E revenues to $15.0 million from $15.2 million, but we are keeping our 2009E EBITDA at –$2.7 million. Using the company’s 2009E $5.0 million capex guidance, we estimate its 2009E cash burn at $7.5 million up from $7.0 million. We estimate Towerstream has enough of its remaining $18.2 million of cash to finance its business until it turns free cash flow positive, which we now estimate could occur by the end of 2010. We also estimate that the company could turn free cash flow breakeven with a $9.6 million cash cushion equal to $0.25 per share. Therefore, we reiterate our BUY recommendation and our $2.00 target based on our DCF, which reflects a 2.9x EV/2010E revenues."

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